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STATE OF THE UNION WITH JOHN KING

Interview With HHS Secretary Kathleen Sebelius; Interview With Three Key U.S. Senators

Aired June 14, 2009 - 09:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


JOHN KING, HOST: I'm John King. And this is our STATE OF THE UNION report for this Sunday, June 14.

President Obama makes a new push for health care reform, but there are strong objections to his call for a government-sponsored insurance option, as well as concerns about the cost of his ambitious plan. Health secretary Kathleen Sebelius is here to lay out the case.

And, as Congress begins the work of writing health care legislation, there is broad agreement on the need for changes, but significant divides over how to pay for reform and how much power to give the federal government. We will break down the options with three senators crucial to any chance for a bipartisan deal.

And, in Tehran, crowds are thronging the streets in support of the reelection of Mahmoud Ahmadinejad to the presidency. Just a short time ago, Ahmadinejad spoke to reporters. He said the election was fair and free, despite accusations of vote fraud.

Our Christiane Amanpour was in the room. We will talk to her just ahead on STATE OF THE UNION.

We will spend most of our day today discussing the administration's urgent push for health care reform here in the United States.

But, first, we go overseas on this Sunday, dramatic developments in Iran: President Mahmoud Ahmadinejad claiming a reelection mandate, his lead opposition candidate claiming voter fraud on a massive scale.

Just a short time ago, President Ahmadinejad gave a speech, claiming the election was free and fair and that he has a new mandate to govern. In the room and asking the questions included our chief international correspondent, Christiane Amanpour. She joins us now on the telephone from Tehran.

Christiane, a dramatic morning there.

AMANPOUR: That's right.

He held a press conference for the domestic and international press, and it was an exceptionally defiant opening statement of 15 minutes, in which he basically claimed complete and total victory, saying that there was no question about the result, and blaming the foreign press for having their own agenda and questioning the results, saying that nobody else in Iran was doing so.

When people mentioned that there were people on the streets protesting, he said they were a handful of radicals and hooligans. He also said that Iran has the only true democracy, that it set a new model for democracy. And he lambasted liberal democracy, assigning it to the ash heap of history.

When he was specifically asked about the United States, he said: There are countries that we are now looking at them with. We're considering the position of all countries with regard to the elections and how they behave -- quote -- "to the will of our people."

And then he said: I have already offered to have a debate with the U.S. president, Obama, on the matter of the nuclear program. He said: In my mind, that is a thing of the past. We stand ready to prepare for any partnership on the nuclear issue and not going to give way to our desire to keep up what he calls a peaceful nuclear program.

I asked him specifically, when I got a chance to ask a question, about the opposition leader, because there are many rumors -- and we can't pin down where he is, Mir Hossein Mousavi, or what is his fate.

We know that several, seven to 10, opposition leaders, officials, activists have been arrested, and more arrests may come. He (AUDIO GAP) directly answer me, despite the fact that I asked it twice. He answered with some kind of allegorical metaphor, in which he referred to traffic light infractions and anybody who speeds and goes past a red light will be fined.

And he seemed to imply that the opposition had broken the law and were being fined or punished right now -- John.

KING: And, Christiane, different set of rule rules when it comes to protesting and airing your anxiety, your frustration, perhaps your opposition to this.

What are we seeing on the streets of Tehran compared to, say, 24 hours ago? Are the opposition forces still out in numbers? Are the police making a determined effort to keep those who believe Mr. Ahmadinejad may have stolen the election off the streets?

AMANPOUR: Yes, they are making that determined effort. There have been riot police on the street, plus the sort of uniformed, non- uniformed shock troops, thugs who go out with their batons and -- and basically pound flesh and crack heads to keep law and order.

That's what's been going on. There were many, many of these protests yesterday, with several thousand people more than that. But, just where we were, several thousand people gathered and holding protests and rallies and shouting to "Mousavi, Mousavi, get my vote back for me."

Overnight, we went out as well in the dark of the night, the early-morning hours, and we still saw many people in the streets. We saw garbage cans burning. We know that there were buses burnt and motorcycles burnt and the like. Today, there have been smaller groups, ad hoc groups, but also some violence, we understand. Crews have been around that. But now the streets are being turned over to the supporters of Mahmoud Ahmadinejad. And his organization, the presidency, has bussed over foreign and domestic (AUDIO GAP) to go and cover that. And we will probably mosey on over there and cover that as well.

KING: Christiane Amanpour on the ground for us in Tehran, a dramatic story unfolding in Iran.

We will continue to follow it in the hours ahead.

Christiane, stay safe. We will be in touch with you.

The administration issuing a very carefully worded statement so far, saying, it is watching the situation closely. That statement did mention some voting irregularities. We will watch the White House reaction, too, in the hours ahead.

We want to turn now, though, to the major domestic story here -- unfolding here in Washington, and that is the administration's push for dramatic health care reforms now.

(BEGIN VIDEOTAPE)

KING: President Obama begins his workweek Monday with a major push for health care reform. He calls the cost the nation's current system unsustainable and says Congress must act this year.

But as his supporters on Capitol Hill get down the details, there are several different flash points. One is the call for a government- run insurance option that would compete with private insurance plans. Another is how to pay for this at a time of a punishing recession and already rising deficit spending.

Joining us now to make the administration's case is the health and human services secretary, Kathleen Sebelius.

Welcome to STATE OF THE UNION.

SEBELIUS: Thanks, John.

KING: Let's start with the moment. Why now, when you have a punishing recession, near 10 percent unemployment, GM bailout, billions of dollars being spent on that. That's just at home? If you look around the world, the uncertainty in Iran, Iraq, Afghanistan, the push for Middle East.

Why now?

SEBELIUS: Well, John, as the president has said all during the campaign, and continues to say now, we can't fix the economy without fixing health care.

The costs are crushing us. It's hurting families. Our businesses are less competitive. We can't continue on this pathway, so, fixing health care, not only taking some cost out of the system, but delivering higher-quality care to all Americans, and making sure that the 47 million Americans who don't access on a regular basis to preventive care in the health care system has to change. And it has to change now.

KING: There are some who would say we have heard this argument before. And I want to take you back in time. It was in 1945, more than 60 years ago, Harry Truman said we needed a national health care system, that it was an urgent priority.

Critics called it socialism. Harry Truman didn't get his way in. Then, in 1993, 16 years ago, then President Clinton said health care was a huge priority for many of the same reasons President Obama lists now.

Let's listen.

(BEGIN VIDEO CLIP)

PRESIDENT WILLIAM J. CLINTON: ... to strengthen the economy will fail, unless we also take this year, not next year, not five years from now, but this year, bold steps to reform our health care system.

(APPLAUSE)

CLINTON: Our families will never be secure, our businesses will never be strong, and our government will never again be fully solvent until we tackle the health care crisis. We must do it this year.

(APPLAUSE)

(END VIDEO CLIP)

KING: The Clinton plan, of course, was defeated in Congress. Now the next Democratic president, Barack Obama, says, the moment is now.

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: Let there be no doubt, health care reform cannot wait, it must not wait, and it will not wait another year.

(CHEERING AND APPLAUSE) (END VIDEO CLIP)

KING: Many people will say, we have been down this road. And some, Secretary Sebelius, make the argument that President Clinton made the very same argument: Our businesses cannot survive. Our economy cannot survive. We must have health insurance.

And, yet, after the Clinton plan was derailed, we had the biggest period of growth in this country in the last 25 years. The unemployment rate was low. The government actually ran a surplus at the end of the Clinton administration, without health care reform.

So, there are many out there who will say this is, you know, boy crying wolf. SEBELIUS: Well, I think that the situation has changed. The good news, is a lot of the people who opposed, not only the plan that Harry Truman put forward -- and he did relentlessly during his administration -- and what Bill Clinton put on the table, they were back as opponents, they're now they're at the table.

Doctors understand the current system doesn't work. They're spending way too much time on paperwork and overhead, and not enough time with patients. Hospitals can't sustain it. The Medicare system is going to be broke down the road in the not-too-distant future, a system that millions of seniors rely upon.

Insurance companies are saying they are willing to change, they're willing to talk about this. That's a very different dynamic than even in the Clinton era, when those same folks were pushed away, saying the status quo is acceptable.

Everybody recognizes the status quo is the enemy. It's unacceptable, unsustainable. We can't continue down this path.

KING: Let's look at some of the policy options. You mentioned doctors.

The president tomorrow will speak to the American Medical Association. Doctors are skeptical about this public option. And let's look at -- we will show our viewers what our means. It's a government-owned health insurance plan, similar to Medicare and Medicaid. And it essentially would increase competition. And the goal is to lower prices by having competition with private insurers.

Those who argue against it say the subsidies from the government would be unfair competition, hurt private insurers, and perhaps drain the federal treasury, because, once you have a government option in place, you need to pay for it.

How will the president make the case to the skeptics, even in his own party, that this is too much government?

SEBELIUS: Well, I think that competition is a good thing, that most Americans understand that choice and competition is what we want. So, if you look at a health exchange, a marketplace, where people can have some options -- in many parts of the country, private insurers have no competitor, in -- in a state like my own home state of Kansas. There is a dominant insurance company in a lot of the states.

So, we created a public option for state employees, so they could choose side by side benefits and prices. Competition is good. You can write the rules for a level playing field.

The president does not want to dismantle privately-owned plans. He doesn't want the 180 million people who have employer coverage to lose that coverage. He wants to strengthen the marketplace.

But, you know, I -- I don't think it's a big surprise that a lot of insurers say, you know, what we would really like is, everybody who doesn't have insurance to be told they must buy it, and buy it only from us.

The president feels that having a public option side by side, same playing field, same rules, will give Americans choice and will help lower costs for everybody. And that's a good thing.

KING: And how do you answer those who would say: "We're not sure. We're not sure. Maybe we will be in that position of a public option, but we're not sure. So, how about a trigger? How about you enact reforms that give the private insurance industry, maybe it's three years; maybe it's five years, and if, by then, they haven't lowered costs, they haven't brought the uninsured into the thing, then the government option would trigger and kick in then"?

What's wrong with that?

SEBELIUS: Well, there are a lot of, now, specific ideas being discussed on Capitol Hill. And, certainly, the trigger is one of them.

But what Massachusetts found when they moved to insuring all citizens of the commonwealth is that, unless you address costs from the very first day, unless you have a system where cost control and cost lowering is one of the goals, you don't do so well. You -- you can bring everybody into the system, but the costs may rise.

So, I think having a public option from the outset, having the design, being competitive, and making sure there is some choice, making sure that consumers have a choice of plan, and, for the first time ever in the United States, making sure that insurers don't decide who gets covered -- if you got a preexisting condition, we want you in the marketplace, we want you and your family to be covered, and we want you to be able to go to a doctor of your choice and have preventive care and wellness care.

That's part of reforming the system.

KING: Another option put forward by those, including in your party -- Senator Kent Conrad, the chairman of the Budget Committee, will be with us later.

He says he's a little skeptical of having a national government- run plan. How about do something like they do in rural areas with electric co-ops? And, so, have a co-op plan. They're privately owned, nonprofit health insurance cooperatives. And he says that would get you your goal. You would increase competition and lower prices.

The argument against it is, it's hard to scope out how much that would cost the taxpayers. But is that worth trying as an alternative, if you have so many centrist Democrats and maybe even some Republicans who would join you if you did that way, not a government option?

SEBELIUS: Well, again, I think that having these ideas on the table is exactly where we need to be right now. The Senate is actively engaged in looking at strategies. There is no one-size-fits-all idea. The president has said: These are the kinds of goals I'm after, lowering costs, covering all Americans, higher-quality care. And around those goals, there are lots of ways to get there. So, we're going to look at idea by idea. I -- I think the good news is, the Senate and House are rolling up their sleeves. They're ready to go to work, and they're ready to work with the president to get this done this year.

KING: Another -- I'm going to use a term that might cause some eye-glaze-over at home, but it could become very important in this debate.

And it's comparative effectiveness research. And this is where you collect and compare data on everything that is done out in the health care. And you want to see essentially what therapies, what tests, what surgeries have a high effective rate and -- and what don't.

SEBELIUS: Right.

KING: The argument for is, you improve the quality of care and you eliminate unnecessary tests, unnecessary procedures, which saves money. The argument against is that, well, that will be used for rationing of some kind.

Will that be used in an Obama administration plan? And is there someone out there who might not get an MRI, might not get a CAT scan, might not get a certain test or a certain procedure because it only works in 50 percent of cases or it only works in 20 percent of cases, and, so, they will be told, no, sorry?

SEBELIUS: Well, John, I think the great news is, is there is fabulous medical care being delivered at lower costs all across America.

I was just in Omaha, Nebraska, and went to Lakeside Hospital, where it's a fully digital hospital. And the doctors have come up with protocol to deal with everything from heart attacks to trauma care.

And they are trying to drive quality, so that every patient who comes through the doors of Lakeside gets the same high-quality care. And they find, not only is it very effective in reducing costs, but it's very effective in terms of outcome. That's what we want to have happen across the country.

So, comparative effectiveness research says, you know, does paying twice as much in McAllen, Texas, as some other part of the country deliver better care? And the answer is no. What are the strategies that work?

Every patient, if you could choose not to be operated on, and have a -- you know, a medication that works just as well, I think, would opt for that. If three tests don't produce a better result than one test produces, I would rather have the one test, thank you very much. So, we want to empower doctors and empower consumers to know what works, how often it works, what is the most effective, and try to help with that care.

KING: You say empower doctors. But if you -- once you have that data, you will be telling doctors, won't you, especially if you have a government-run plan that is setting the tone of the marketplace and the rules of the marketplace? You will be telling them what's in and what's out, won't you?

SEBELIUS: Actually, the comparative effectiveness research says, as part of the rules, that Medicare cannot use the research for payment decision. It prohibits, you know, the kind of rationing that people talk about.

What we're doing right now is rationing quality, not cost. Higher cost does not translate to higher quality. We want better health outcomes for every patient. If you come through the doors of a hospital, if you see your doctor, you should be getting the best possible information, the best possible strategies.

And that's happening some places. It's not happening every place. And we think that part of reforming the system is that every American should getting the best bang for their buck. And they're not doing it right now.

KING: Much more to discuss with the secretary of health and human services, Kathleen Sebelius. Stand by. We will have a lot more to discuss.

We will also get a status report on efforts to fight the H1N1 flu virus, which the World Health officials now say is a global pandemic.

Stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

KING: We're back with Health and Human Service Secretary Kathleen Sebelius.

And we wanted to come over to the magic map to take a peek. This is a map that shows...

SEBELIUS: Right.

KING: ... the percentage of uninsured across the United States -- essentially, the brighter the state, the highest percentage of residents in that state that are uninsured.

But I want to just focus on a few facts as we continue the conversation here. There are an estimated nearly 46 million Americans who are uninsured. Those projections vary a bit, but that's a rough number people accept. Sixty million Americans, by most estimates, lack a relationship (AUDIO GAP) you get when people get sick, 120 million emergency room visits a year, which drive costs way up.

SEBELIUS: Right.

KING: Now, how to deal with that is a big part of this debate, Madam Secretary.

I was in Florida this week. And a family physician named Dr. Dennis Saver says you need more primary care physicians, like him, but that medical students don't want to do it. And here's why, he says.

(BEGIN VIDEO CLIP)

DR. DENNIS SAVER, PRIMARY CARE OF THE TREASURE COAST, INC.: There aren't enough primary care physicians right now. The economics right now make medical students disinclined to choose a career in family medicine or another primary care specialty, because most of them come out with a very substantial debt out of medical school, substantial meaning $150,000.

And they say, well, I can earn this, or I can earn twice this. What am I going to choose? Well, these are not dumb people. They make an obvious choice. (END VIDEO CLIP)

KING: How do you use the power of the government, whether it's tuition subsidies, other incentives, to get more of these doctors to go into family primary care, and not the higher-paying specialties?

SEBELIUS: Well, John, the doctor is absolutely right, that the financial incentives are now weighted toward specialty care, and not to primary care and not to family practice docs.

I was with two young third-year residents in Omaha, and they said exactly the same thing. They want to go in family medicine, but they say, you know, at the end of the day, you say: How can I do this? How can I justify it?

We can begin to change those payment incentives. And we're doing that right now through the Medicare system, helping to pay off tuition, helping to rebalance the incentives, financial incentives, to go into primary care.

The other thing that we -- we are doing -- and the Recovery Act provided some important resources to do it -- is double the number of Commissioned Corps members, so that doctors who serve in underserved area, who provide primary and preventive care absolutely are going to have their tuition paid.

We want more nurses and more mental health professionals. But the notion of the emergency room visits, which is going on all over the country, people coming through the door of emergency rooms, not only is it expensive and ineffective, but, frankly, they come at a sicker time. If they had that early checkup, if their kids got the preventive care they needed, we would lower costs for everybody, instead of having them come through the doors of an emergency room.

KING: In the absence of national reform, many states have acted on it.

And I want to just remind our viewers again here, the brighter the state, the higher percentage...

SEBELIUS: Right.

KING: ... of its residents who do not have health insurance.

Well, look, Massachusetts is blue, the smallest percentage in the country without. Now, why is that? They have enacted state health care reform that includes a controversial item, an individual mandate on health insurance. You must get health insurance in Massachusetts.

You can be penalized more than $1,000 if you don't buy insurance. Employers with 11 or more employees are required to buy it. And, as a result of this program, more than 97 percent of the state's residents now have health insurance. Is this the way to go, Secretary Sebelius, at the national level, an individual mandate that says, you buy insurance, or else you will pay a penalty?

SEBELIUS: Well, as you know, the president, during the campaign -- and continues to say -- he -- he felt that parents need to purchase health insurance. The individual mandate should fall on parents.

There's a lot of discussion in Congress of whether to expand that, like Massachusetts, and say, everybody has a responsibility. Most people, in my experience, don't have health insurance, not because they don't want it -- because they can't afford it.

So, a mandate only works if, in Massachusetts, you have subsidies, help to pay if you're lower income, help for employers to come into the system, help for everybody to get insurance, and get rid of the rules that say, if you're sick, if you have had a preexisting condition, if you have had a heart attack or a stroke, we don't really want you, or we're going to charge you so much, that it's totally unaffordable.

So, the rules have to change in order for any kind of a mandate to work.

KING: But you're open to it?

SEBELIUS: Well, I think having everybody step up to the plate, having employers encouraged to come into the system, individuals certainly come into the system, and the government play its role, I think, then we can fully cover all Americans and lower costs for everybody.

KING: Well, let's have a seat as we continue to what is the crux of the issue now, which is, how do we pay for this? During the campaign, you mentioned that then Senator Obama was a bit skeptical about an individual mandate. He was also quite critical of a proposal pushed forward by Senator McCain, saying, increase -- to put tax -- tax the benefits that you receive from your employer.

I want you to listen to the president from the campaign.

(BEGIN VIDEO CLIP, AUGUST 28, 2008)

OBAMA: Now, I don't believe that Senator McCain doesn't care what's going on in the lives of Americans. I just think he doesn't know.

How else could he offer a health care plan that would actually tax people's benefits?

(END VIDEO CLIP)

KING: But a tax on benefits is now on the table, right? Many in Congress think that's the best way to go. SEBELIUS: Well, certainly, it's one of the items being discussed, not by the president, but by members of the House and Senate.

I think that, again, the president starts with the premise that 180 million Americans have health coverage through their employer, that attacks on those benefits may dismantle that marketplace. So, while you are trying to make sure we cover the 47 million Americans who don't have coverage, what we don't want to do is destroy the system that currently is in place that lots of Americans like.

You start with the premise of, you continue what works and fix what's broken. So, there is still a great deal of disagreement on whether or not taxing benefits at any level of any kind really does put us a step forward or take us a step back.

KING: We will have you back as the debate unfolds.

Before I let you go this morning, I want to just ask you about the H1N1 flu virus. You were on the program a short time back, when we were very concerned about the spread of the virus. Seems to have calmed down, but do you expect a resurgence in the fall, as the flu runs its normal cycle, and will there be a vaccine ready by then?

SEBELIUS: Well, we're certainly making every effort to be totally prepared. The flu vaccine, strains are being tested as we speak. Production lines are being set up, so that production could start as early as late summer and be ready by the fall, if, indeed, a vaccine program is recommended.

We're watching the Southern Hemisphere. Flu season is unfolding there, and we need to know what H1N1 is going to do when it mixes with the flu, and certainly watching across the country, as transmission continues.

The good news is, it still seems like not such a lethal virus, but we're fully prepared. We're getting governors ready to go, in case a major vaccination program is needed, working with school officials and health officials. So, preparation is -- is very much under way for what may happen this fall.

KING: Thanks for stopping in.

SEBELIUS: Glad to do it.

KING: We will, again, catch up again as the health care debate unfolds.

And you just heard the Obama administration's side of the health care debate. Next, we turn to three senators who agree with the president that reform is an urgent priority, but they worry the White House wants to give the government too much power.

Stay with us.

(COMMERCIAL BREAK)

KING: Many Republicans, as well as some Democrats, are skeptical of President Obama's health care proposals. So, what are the odds of passage, and is there any chance Democrats and Republicans might come together on this important issue?

Democratic Senator Ben Nelson of Nebraska joins us from Omaha. Republican Senator Susan Collins is in her home state of Maine this morning, and, here in Washington, Democratic Chairman of the Senate Budget Committee Kent Conrad of North Dakota.

Senators, thank you, all.

I want to spend most of our time on health care, but I want to start with the dramatic developments in Iran. President Ahmadinejad says he's won in a landslide. The opposition candidate says he believes he's been cheated. And the White House, in a very carefully worded statement, does say it believes there have been some voting irregularities.

Senator Conrad, to you first.

This president has said he wants to reach out to Iran, he wants to have a big dialogue with Iran. If Ahmadinejad claims victory, and the White House believes there are irregularities, does that diminish the reasons and the -- the moral standing of Mr. Ahmadinejad, to the point where you think dialogue should be lessened?

CONRAD: You know, I don't know any of us know at this moment. If he won in a legitimate election, that's one thing.

If it was filled with fraud, as is now alleged, that's quite another thing. And we see the Iranian people in the streets by the thousands, saying that they believe that their votes were stolen. So, this becomes a very serious matter for the Iranian people, and certainly for our relations with them.

KING: And, Senator Collins, our Christiane Amanpour is on the scene, and she says some opposition leaders have been arrested.

Can President Obama have a dialogue with a government if he believes there have been voting irregularities and if he believes people who are trying to protest are being arrested?

COLLINS: It certainly makes such a dialogue much more difficult. But, frankly, I have always been skeptical about the success of any kind of dialogue with the hard-line leaders of Iran. We should certainly give diplomacy a chance. But I am skeptical that it will be successful. And these voting irregularities, the arrests of opposition clerics and opposition leaders, certainly makes it far more challenging for the president.

KING: And, Senator Nelson, does the United States have many options here, in a country that doesn't often care much what we say?

NELSON: Well, certainly not until there's some more clarity about what did or didn't happen in this election.

But the arrest of opposition leaders for traffic violations probably tells more about the story than anything else that's being reported.

KING: All right, let's move on to the health care debate here in the United States.

Chairman Conrad, you have put forward a proposal skeptical of this government option -- number one, skeptical. Number two, you have done the math and don't think the votes are there for it in the United States Senate.

So, you say, let's do what we do in rural America with the electricity cooperatives. Let's form a cooperative, some government help, but not government power. We just had Secretary Sebelius on the program. She said, well, let's see, a lot of ideas on the table.

But they would not commit to it, not against it, but not for it right now. Why do you think that is the way to go, and the president's plan, or Senator Kennedy's plan, as it now stands, is wrong?

CONRAD: This really isn't, to me, a matter of right or wrong. This is a matter of, where are the votes in the United States Senate?

About two weeks ago, I was given the assignment by this so-called G-11 group. That's the chairman and ranking members of the key committees. And they asked me, almost in an offhanded way, see what you can come up with in terms of a compromise, because we have one group who very much wants a competitive delivery model to for-profit private insurance companies.

We have got another group, Republicans and Democrats, who are adamantly against the public option, because they see that as government control. So, a co-op model came to mind.

And, by the way, it's not just in rural areas. We have real electrics in 47 states -- real electric cooperatives. Ace Hardware is a cooperative. Land O'Lakes, $9 billion entity, is a cooperative. REI is a cooperative.

So, we have got lots of cooperative models around the country that are very successful. And they're membership-owned and membership-controlled, not government-run. But they do provide a nonprofit competitive model for the for-profit insurance companies. That's -- that's the potential of this idea. It appeals to both sides.

KING: And, Senator Collins, if Senator Conrad can sell that idea, can President Obama get Republican votes here?

COLLINS: Well, it's an intriguing idea.

I have long supported the idea of allowing small businesses to band together and bind co-ops to increase their bargaining power. In addition, I'm a co-sponsor of a bill with Senator Feingold that also would establish purchasing co-ops for big businesses, small businesses, farmers, a wide variety of people.

So, I commend Senator Conrad for coming up with this idea. It's far preferable to the government-run plan that has been discussed by the administration. So, this is a possible compromise. I need to know more details. We need to better understand how it would work. But it's certainly better than a Washington-run plan.

KING: Senator Nelson, will you accept a public option? You have, on previous occasions, said it's a bad idea. And, other times, you have said, well, you would need to see the details of it.

What can the president do to get Senator Ben Nelson of conservative Nebraska to say, "I can take more government role in health care"?

NELSON: Well, I think the government role can be a backup, as it is in the case of -- of the prescription drug benefit that's been part of the Medicare plan. That's a private -- private market that has been made available with a backup by a government option, if you will, a public option, that's triggered in the event that there's no market available on the private side.

And I think that's what -- what we really ought to be looking at. I -- I -- Senator Conrad is on to something here. This -- this can be an additional method for competition. You will have private insurers. You can have cooperatives. And a lot of these ERISA-type programs are self-insured. Many large employers self-insure.

What we want to do is, we want to make sure that we preserve what's there -- the president has made that very clear -- and be able to have competition, but to do it in a way that you don't destabilize the insurance for 200 million Americans, trying to provide a way for 42 to 46 million Americans to have health insurance as well.

KING: Does it make you, Senator Conrad, somewhat skeptical of their motives, if they won't take a trigger? Let's say, you take your proposal, co-ops, you do other things, and you essentially tell the private insurance industry, you are going to get your act together, or else? Whether it's three years, five years, two years, pick your date. Pick your threshold. And, if you don't meet this standard by then, then this government option will kick in.

Why does the White House, why does Senator Kennedy, why does Chairman Waxman on the House side say no?

CONRAD: Well, you would have to ask them. Obviously...

KING: You talk to them.

(LAUGHTER)

CONRAD: I do.

And they're very committed to what I would call the pure public option approach, and understandably. There are very good arguments they can advance.

The problem is votes, you know? At the end of the day, nothing advances unless you get 60 votes in the United States Senate. Now, I know there are some who are saying, we can do this through reconciliation, which is a special fast-track process...

KING: Right.

CONRAD: ... that only requires 51 votes.

But I think, on exploration, people will find that really does not work, for a lot of arcane reasons we don't need to go into. So, I think you are in a 60-vote environment. And that means you have got to attract some Republicans, as well as holding virtually all the Democrats together.

And that, I don't believe, is possible with the pure public option. I don't think the votes are there.

KING: We're going to ask our senators to stand by. We're going to work in a quick break. We will be back with Senator Conrad, Senator Nelson, Senator Collins in just a minute.

Much more to discuss when STATE OF THE UNION returns.

(COMMERCIAL BREAK)

KING: We're back with Democratic Senators Kent Conrad and Ben Nelson and Republican Senator Susan Collins.

I want to spend a few moments on how we're going to pay for this, at a time the government is in such dire straits. And I want to do by showing our viewers a fascinating graphic. We borrowed this from this morning's "Washington Post." But, if you look at this, cost of Iraq war, $0.6 trillion in government borrowing, cost of World War II, $3.6 trillion. Government borrowing under President Obama's proposals from 2010 to 2020, $9 trillion. And you look at the different circles there, the big blue circle on that screen is what President Obama proposes borrowing over the next decade. When you look at stunning numbers like this, Senator Collins, can the United States government afford health care reform right now?

COLLINS: Well, the president's budget projects deficits that simply are not sustainable in the long run. They pose a threat to the health of our economy.

I do believe that we need to tackle health reform. And that's important. We need to tackle entitlement reform to get a handle on our budget. But, so far, there is not agreement on how to pay for health care reform.

I think we need to look at where the money is going. For example, nearly one out of four Medicare dollars are used to treat and care for people with diabetes. That calls for an initiative to help improve treatment for people with diabetes and ultimately to prevent it.

Thirty percent of Medicare is used for care during the last year of life. We need to change our reimbursements to promote hospice care and home health care, which most people would prefer to have. So, there are steps we can take to improve the health care delivery system that can actually help us pay for an expansion of care, and, also, most important, to make health insurance more affordable for families who are insured now.

KING: So, if -- Senator Nelson, if you agree that this should be more targeted, number one, for policy reasons, and, number two, for price reasons, why is it that the administration wants to do it all at once?

You hear the administration's argument, the business community needs this. Our economy needs this as much as the patients need it. And you hear others saying, well, that's what Bill Clinton said. And when his plan went off the tracks in 1994, the economy actually grew. The unemployment rate was low. The government, God forbid, ran an operating surplus for a couple of years.

Is the administration's big argument wrong?

NELSON: Well, I -- I think what they're right on, for sure, is that we do need to improve the delivery system to reduce the costs.

Senator Collins is right on target there. If we can reduce the costs of care, we're going to reduce the cost to the public and we will reduce the cost to the government in the -- in the overall.

For example, there's a study out that says about 45 percent of the procedures that are applied in health care are inappropriate -- not malpractice, but inappropriate. In other words, what we -- with electronic transfer of records, with the focus on outcomes, on comparative medicine, we're going to find better ways to deliver health care, more cost-effective -- cost-effectively, and better health care.

That will result in a reduction in the costs, including, I think, the -- the very expensive process we have right now of the shifting of costs from the government-run programs, Medicare, Medicaid, TRICARE, the -- the availability of SCHIP, or KIDS CONNECTION in Nebraska, which are -- in many cases, under-re -- under-reimbursing health care providers, which is a cost shift to private pay, as well as to self- insured.

So, there are ways to squeeze and wring some of the costs out, which I think will be helpful in the overall computation about how we pay for it.

KING: We will -- we will spend a lot more time on this in the weeks and months ahead.

I want to close with you, Senator Conrad, on the math of this. You say the votes aren't there right now to pass what the president wants. I want you to project that out a bit further. When you look at all that borrowing that you saw in that graphic right there, you were around in this town in 1994. The Clinton plan went off the tracks. The Democrats lost 52 seats in the House and enough in the Senate to give the Republicans a majority.

Do you see your party right now on a similar road, if people -- if we continue the deficit spending, and if Republicans are able to make a big-government argument, because, even if all this passes, and even if it is near perfect, the results won't be known to the American people by the time they vote next November. They won't see it yet.

CONRAD: Look, this is a challenging circumstance.

But you asked the fundamental question: Can we afford to do it now? We can't afford not to. If you look at what's happening to family budgets, what's happening to our businesses, what's happening to our government, in this economy, we're spending one in every $6 in health care.

On the current trend line, we're headed for one in $3 to be spent on health care. That's totally unsustainable. We have got to reform the system. Senator Collins, Senator Nelson have given very good ways to do that by reforming the delivery system.

I hope my co-op idea makes a contribution. Look, this is something that we simply must do for our families, for our businesses, for the country itself.

KING: We will have all three of you back as the debate continues. I wish we had more time this morning.

Chairman Conrad, Senator Nelson, Senator Collins, thanks for being with us this morning. And next: the health care debate up close. We take you to Central Florida, where the recession is adding more people to the already crowded waiting rooms at clinics that help those who can't afford health insurance.

Stay with us.

(COMMERCIAL BREAK)

KING: In our travels this week, we wanted to get a sense of how you feel and how you see the health care debate.

We went down to Florida because it captures so many of the big demographics in our country -- the state unemployment rate now, 9.6 percent -- 3.7 -- 21 percent of the people of Florida lack health insurance. That number has gone up because of the rising unemployment rate -- 270 doctors per 100,000 residents. That's ranked third in the country.

We wanted to ask these questions of patients: How do you think the health care system could be better? We also wanted to ask doctors, what's right with the system and what's wrong?

(BEGIN VIDEOTAPE)

KING (voice-over): Mary Yates is back. And, again, the news about her blood pressure is not good.

MARY YATES, UNINSURED: We want to see a number around 100 or below. And yours is 145. LDL, which is the bad cholesterol, is a risk factor for coronary artery disease.

KING: The last prescription made her dizzy, so Mary gets a different drug this time, as well as an anti-inflammatory for a sore hip.

YATES: Taking all this medicine, can you just take it just one pill after -- after another at night?

UNIDENTIFIED MALE: You can. You can. But you...

YATES: Really?

UNIDENTIFIED MALE: Just be sure to take them with food.

KING: This is the employees clinic at Florida Hospital in Orlando. But Yates doesn't work here. In fact, she doesn't work at all. Two years ago, she lost her job, then her home, and more.

YATES: I'm the person that's fallen through the cracks here, after working all these years. You know, I thought I was saving toward retirement. I have -- I have used that.

KING (on camera): So, without this clinic, you would be what?

YATES: I might be dead. That's what they were telling me. My blood pressure was running about 180 over 100. He said, it's at stroke level. You need -- you have got to get in to see a doctor.

KING (voice-over): Three days a week, this is a free clinic, first come, first served.

And Dr. Jenni Keehbauch says the recession is driving up demand.

DR. JENNI KEEHBAUCH, FLORIDA HOSPITAL: And what we have found is that we're turning more patients away, unfortunately. And -- and we are needing to expand in the near future. We're seeing patients that saw us in the early 2000s, left us, got jobs, got insurance. And then now they're coming back again, saying: Hey, we're glad you're here. I just got laid off.

KING: Ask Dr. Keehbauch about the health care reform debate in Washington, and increasing access is her first priority.

KEEHBAUCH: In our county alone, we have 200,000 patients that are uninsured. So, there's just poor access to care. And the care is fragmented. Even the people with insurance, you know, they have a lot of specialty care, but they don't have a permanent care person that is kind of captaining the ship.

DR. DENNIS SAVER, PRIMARY CARE OF THE TREASURE COAST, INC.: Breathe real deep.

KING: Dr. Dennis Saver, whose practice is in Vero Beach, sees major long-term savings in erasing that shortage of primary care physicians.

SAVER: The whole system is really, really expensive, because we don't do it right. If we had thoughtful primary care on the front end, then people would not need to go and see three or four different doctors for one problem.

All right, sir.

KING: And Dr. Saver sees merit in calls for an individual mandate requiring every American to get health coverage.

SAVER: I think it does make sense, because you -- you can't have a system in which people are out of it when they're healthy and only in it when they're sick. And, so, it's kind of like everyone pays taxes. To make the infrastructure work, I think that -- that you really have to have everyone in there contributing.

KING: Mary Yates would love to be contributing, but can't find work. And even the help from the free clinic only goes so far.

YATES: It's just tough. I feel sorry (INAUDIBLE) because there's people out there I have met here that have nobody. You know, at least I have some family that can help.

But even family I have called this year, they have said: "Don't call me and ask me anymore. I can't."

I mean, now I have got to come up with money to go buy prescriptions. And that's not going to happen a lot. It may not happen this week. I don't know. I don't know what to do.

(END VIDEOTAPE)

KING: Just want to thank Mary Yates and everyone we met in Central Florida for sharing their stories and their thoughts with us.

Coming up at the top of the hour for viewers here in the United States, Howie Kurtz looks at why the media spotlight is back on Alaska Governor Sarah Palin.

(COMMERCIAL BREAK)

KING: I'm John King, and this is our STATE OF THE UNION report for this Sunday, June 14.

Alaska Governor Sarah Palin is back, making headlines and sparring with a late-night talk host. Is she getting fair coverage from the national media?

Our -- in our RELIABLE SOURCES hour, Howie Kurtz breaks down the press coverage with three veteran observers.

And later: tweets and Twitterers who send them. What is the 140- character limit doing to journalism? CNN's Rick Sanchez and Gregg Doyel of CBS SportsLine debate issue.

And, of course, we will have continuous updates on the developing situation in Iran, where demonstrations in support and in protest of the election of President Ahmadinejad continue.

That's all ahead on this Sunday's STATE OF THE UNION.

It's time now, as we do every Sunday, to turn things over to Howard Kurtz and his RELIABLE SOURCES.

And, Howie, "The New York Times" one of many newspapers across the country today dedicating a lot of space and dramatic pictures to what's going on, the developing situation in Iran over the presidential election.

KURTZ: Yes. And, John, executive editor Bill Keller one of the journalists in Tehran doing the reporting there.

Which struck me in watching the coverage yesterday and today, including that from CNN's Christiane Amanpour, it is awfully difficult for journalists, even the best ones, to sort out the central question there: Was this election rigged?

KING: Absolutely right. It's a very tough country to cover. And we applaud everyone over there trying to do their best.

(LAUGHTER)

KURTZ: All right. Talk to you later in the hour, John.

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