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Anderson Cooper 360 Degrees

Extreme Challenges: Health Care Reform

Aired August 22, 2009 - 20:00   ET


ANDERSON COOPER, CNN HOST: Hello, and welcome to a different take on a vital subject. Vital because it matters to all of us. Different because we're keeping this to a minimum.




COOPER: Right now, you've heard plenty of shouting about health care reform, but far less about what reform actually is, and what it means to you. What changes, what doesn't? The benefits, the costs and the costs of doing nothing.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Bankrupting families. It is bankrupting businesses. And we are going to fix it when we pass health insurance reform this year. We are going to fix it.



COOPER: At the end of this hour, you will know in plain English details of what President Obama wants, and how he says they are going to pay for it. Also, what's in some of the plans going through Congress right now. In plain English, the public option, coops, mandates. All those things that some lawmakers say they can't live with and others say they can't live without.


SEN. KENT CONRAD (D), NORTH DAKOTA: There are not the votes in the United States Senate for the public option. There never have been.

REP. ANTHONY WEINER (D), NEW YORK: In the House of Representatives, without a strong public plan, even stronger than the one we reported out of committee, I think it would have a very difficult time getting 218 votes.

SEN. JIM DEMINT (R), SOUTH CAROLINA: What we are trying to do is to stop the stampede towards more government takeover and taxes, and to move on to real health care reform.

(END VIDEO CLIP) COOPER: Believe it or not, by the end of the hour this will all make sense. Health care, President Obama's extreme challenge and yours.

All the angles in the hour ahead with help from our panel, senior political analyst David Gergen, chief medical correspondent Dr. Sanjay Gupta, Pamela Gentry, senior political analyst at BET and CNN business correspondent Christine Romans.

We're going to start with David Gergen. Some very big stacks of paper. I just want to show our viewers these, which are the various House and Senate proposals that we know about. David, you work in the Clinton White House as adviser. What is President Obama doing differently?

DAVID GERGEN, CNN POLITICAL ANALYST: Well, I want to say, Sanjay says he's actually --


COOPER: He claims he's read these.

GERGEN: Who is lying?


GERGEN: Anderson, President Obama has taken a very different approach from what President Clinton did. Back in the Clinton days, Mrs. Clinton, co-captain of the team in the White House to write a bill, came up with a bill that's even bigger than this, if you can believe it, and sent it to The Hill. And Congress essentially said, not written here, we don't like it and it fell with a thud.

So instead of doing that Rahm Emanuel who is working with President Obama and others said let's have The Hill write this, this time. So President Obama early this year came out with a set of general principles, like eight general principles, very vague but general principles. And they left it to the Congress to write it.

COOPER: So now we have several different plans being talked about on Capitol Hill.

GERGEN: Right. And that's been a problem for everybody. Because there is no one bill. Instead, we have this. And, in fact, there is going to be more.

COOPER: Let's talk about what's been more or less agreed upon in principle and what has not been agreed upon. Sanjay, you were up for consideration as surgeon general. You talked to the president about health care in general. What are the general principles that have been agreed upon in all the various bills?

GUPTA: I think the --

COOPER: Since you claim you have actually read them.

GUPTA: That's right. Well, I read the House bill.


GUPTA: It's what make my way through there. But lowering cost and increasing access, sort of this broad categories. Having said that, it's very expensive no matter how you look at it, which bill are you talking about, over $1 trillion over ten years.

So these are the numbers we are starting to hear. And I think when that sank in, people really started paying attention to this.

Also, this idea that people have to have insurance. So for example, if you are uninsured right now, but you can afford to buy insurance, you have to go buy it. If you don't, you pay a penalty. If you can't afford it, then you might get subsidies. That's sort of a broad principle as well.

Another big deal from a medical perspective as well as policy is this idea that you don't discriminate based on pre-existing conditions. This has been a real problem, because people, you know, they simply can't get health care insurance because maybe they have money, but if they have some sort of illness, their premiums are way too high for them to afford it. It's that non-discriminatory thing seems to be consistent among these bills as well.

The expansion overall of government programs. So, you know, to qualify for Medicaid, you have to make the lowest certain income. That income level may go up a little bit. Again, if you look at the bills, that maybe something consistent between the bills, and find this idea of just subsidies. The idea that people are going to come in and try and help people who can't afford it overall to get health care insurance.

COOPER: OK. Those are the issues that are more or less been agreed upon no matter what version of the bill is finally passed. What about the biggest issues that haven't been agreed upon.

GUPTA: Well, the thing that people talk about the most lately is this idea of a public option. The public option, this option that would be on the backpayer's, taxpayer dollars to try and provide health care for those who don't have it because they can't afford it. Should that be a government run program or should that be a non-profit, that's not government run such as coops. That's another things that's come in to play. Or should there be no option like that all. And should this all be just sort of saying insurance reform is the name of the game here. We have to force the private insurance companies to do those two things -- cut costs and increase access.

You know, Anderson, how to pay for this has been something that, you know, has come up almost since people started talking about this. We have been covering this for over a year now. How to pay for it has always been the issue here. Some say, look, if you create a healthier society overall, it prevent people from getting sick in the first place, you're going to bring down costs. How long does that take? How much of an impact would that have? Hard to say. Employer mandates is another issue. So do you have to provide health care insurance? What size company has to do that? What quality of health care insurance do you have to provide? These are things that are not agreed upon in the bill.

I think the most interesting things really is the timeline. You know, as urgent as this issue is right now, if you look at the timeline, it's very realistic that nothing will happen, really, that people will notice until about 2013. And, really, three years after that until you see really the full manifestation of any of these.

COOPER: So this is not instant.

GUPTA: This is not instant by any means. And, really, over the next couple of years, you probably won't see hardly anything. Maybe some funding sources but that's what about it.

COOPER: We want to bring in B.E.T.'s Washington correspondent Pamela Gentry. You work in healthcare under the Clinton administration. This is really the first political test for Barack Obama. And I want to play something that he said about a month or so ago.

Let's take a look.


OBAMA: Just the other day, one Republican senator said, and I'm quoting him now, "If we're able to stop Obama on this, it will be his waterloo. It will break him." Think about that. This isn't about me. This isn't about politics. This is about a health care system that is breaking America's families, breaking America's businesses and breaking America's economy.


COOPER: President Obama is responding to a comment by Republican Senator Jim DeMint of South Carolina.

How has the president done so far on this? I mean, they clearly have not been on track.

PAMELA GENTRY, SENIOR POLITICAL ANALYST, BET: During the campaign, Senator McCain and Senator Obama both talked about health care reform. Everyone agreed that something had to be done. How they got off track. But now, it's only the Democrats who wanted reform and not the Republicans. And he hasn't been able to keep his bipartisan word. It's really hurting him politically.

COOPER: Christine Romans has talk about money, a lot of money, obviously. Take a look at this number. Estimated price of President Obama's health care plan is $1 trillion. That's estimated. That's over ten years. And it's in a multi-trillion dollar budget, but it's still a huge expense. Arguments are being made on both sides. Some saying we can't afford to do this. Government spending too much money already. Government is too big. Others saying we cannot afford not to do it, because the current system is broken. And with medical costs rising fast than inflation, eventually, we're going to go broke.

ROMANS: And millions of Americans are saying, look, I'm paying as much for my own health care as I am for my rent, or very close, and I can't go on like that. So you have a situation where we are talking about big dollars from Washington if you do something, and big dollars if you don't.

And you have people on the ground who don't have health insurance who are going to the emergency room as first point of contact or are going without, you know, important preventive care, and it's just costing the system more and more and more.

We know that our health care system is inefficient. We know that it's gobbling up an ever bigger part of our economy, of our dollar. And in terms of the trillion, this is what gets people so concern. We are throwing around such big numbers here that even, you know, veterans covering how much money Washington spends can barely get their heads around it.

COOPER: And it's just an estimate at this point.

ROMANS: It's just an estimate.

COOPER: I mean, those who say, look, that's a low ball number.

ROMANS: Yes. This president has made -- he has made a calculation here that this is the time for him to spend the political capital to do something.

GERGEN: What we do know, and I think one of the reasons why a lot of Americans are concerned is we do know that when we had programs like this in the past, they've always wind up costing one heck of a lot more. Medicare costs one heck of a lot more in part because a lot of new technology came online that became available to people over 65. And everybody said, sure, they ought to have access. But the expenses went up and up and up. Same thing with prescription drugs under George W. Bush. It's cost a lot more than it would have first estimated by the government. So when people say a $1 trillion, the American people are actually thinking that's just a start. That's their opening bid.


GUPTA: I read that Medicare was supposed to cost some $9 billion by 2009 and it cost $67 billion. So that's not far off.

GERGEN: And, Sanjay, I think that one of the additional district areas of disagreement is, the president himself said, look, there are two real problems with health care system. One is the number of people uninsured, but secondly is the costs. And the costs have skyrocketed. The cost of premiums have doubled essentially since 2000. There is very little in any of these bills that really does contain cost.

COOPER: We're going to look at more of that in just a moment. Next, the details you really care about. Your bottom line on health care reform. How will potential changes affect your cost and your coverage? If they will at all. That's next.

Plus, other groups, powerful and well-financed group that also have a big stake in reform or in stopping it. We're talking about Big Pharma, insurance companies, doctors, employers and more. Ahead on "Extreme Challenges: Health Care."


COOPER: We're back with "Extreme Challenges: Health Care." You're your care we're talking about. Our bill to pay. President Obama's political and leadership challenge.

He has been trying to drive home the message that the way things are, the way prices keep rising and the way the system works now simply cannot work much longer.


OBAMA: Our system really is not a health care system. It's more like a disease care system. All right? We wait until people get sick and then we provide them care.


COOPER: Well, whatever you call it, here's how it works. How reform would change it? And who's the stake holder. According to numbers from the non-partisan commonwealth fund, 164 million Americans have insurance through work. They would keep their coverage though companies could change their providers and plans the way they already do. Premiums would likely stay the same.

Fourteen million Americans buy insurance individually. Those with pre-existing conditions often facing exclusions, denial or crushing premiums. Their premiums could fall under reform, and pre-existing conditions would no longer affect coverage. 49 million are without insurance. They would be required to buy it or pay a penalty. Government help would be available to help pay for it. 81 million now have Medicare, Medicaid or VA coverage. Medicaid may expand to cover more lower income families. Medicare would largely stay the same.

So, Sanjay, who would most be affected if reform went through?

GUPTA: I think it's the people who don't have health care insurance and can't afford it. It's interesting because, and you just made the point that if you can afford it and you don't have it, you got to buy it.

COOPER: So they would be, what, penalized?

GUPTA: Yes. There will be some sort of penalty, and this is already taking place in the State of Massachusetts, for example. And some say it works pretty well. You have about 97 percent covered in the State of Massachusetts. Some say it's not fair enough to penalize people that way. However you look at it, that's what's sort of on the table right now.

GERGEN: I think the big break through would be the universal coverage. Every other industrialized country has it. But the second thing, and what's been interesting about the Obama administration is it shifted the argument over the last few weeks to talk about the benefits for the insured. And that wasn't part of the original argument, but it's now --

COOPER: Because the people were seeing at those town halls who are angry. Those are largely people who already have insurance.

ROMANS: Have insurance.

GERGEN: They are, yes.

But there are two groups of insured. There are ones who are working. And they will now no longer face if this bill goes through. They will no longer face the problem that if they leave their job and they try to get new insurance, what if you had cancer in the past, we won't insure you, with pre-existing condition.

Or some people face the problem that they have they have good insurance, they get sick and the insurance company calls and says, you know what, you made a mistake. You didn't tell us something straight on your form. We are not going to pay you. It's called a rescission.

There is a second group of insured, people over 65, who were showing up at the town halls, who are fearful, they're going to get something worse. They think that Medicare is going to be affected in a negative way. That they will pay -- what they're going to pay for this in part, 40 percent of it, is to take it out of Medicare. And they think the quality of care for them is going to go down.

GUPTA: And what they have talked about this time about hundreds of billions of dollars in waste in Medicare that they removed, but how you define waste exactly and how that would affect the care of people.

GERGEN: Don't you think that's only the kind of way...


GUPTA: Well --

GERGEN: Do you think -- don't you think it's going to lead to some change in care?

GUPTA: I think it probably has.

COOPER: I mean, the politicians always when they want to say they are able to reduce costs without hurting anyone, they always say, well, there's all this waste in government that we can take out.

GERGEN: Ronald Reagan.

GUPTA: Exactly.

GERGEN: Hard to find.

COOPER: There are a lot of players in this game on both sides. So how much influence do special interest groups have in obstructing health care reform. Listen to what President Obama recently said at a town hall meeting in Montana.


OBAMA: Every time we are in sight of health insurance reform, the special interest fight back with everything they've got. They use their influence, they ran their ads and their political allies try to scare the heck out of everybody. It happened in '93. It's happening now.


COOPER: All right. Let's talk about specific groups that have an interest in either blocking reform out right or changing it or limiting it in some form. Big pharmaceutical companies.

Is there anything in these reform bills about lowering the cost of prescription drugs?

ROMANS: Well, the pharmaceutical industry, which was not a party to the 1993, 1994 effort is now with the White House. They want coverage. They want affordable coverage for everyone, and they want co-pays to be reasonable. And pessimist or skeptic would say that's because they're going to have this huge group of people who are going to be able to...


GENTRY: New customers.

ROMANS: They have agreed -- they have agreed to cut $80 billion out of their costs, and interestingly...

GENTRY: Over ten years.

ROMANS: Over ten years, and they are interesting, they are spending $150 million in advertising to push for health reform. And a lot of people like Robert Reich, former Labor secretary in Clinton, he smells a rat. And he says, a lot of people are saying, look, they wouldn't do it. It wasn't good for their industry.

COOPER: Why doesn't, something like Medicare do a system like the VA does, where they negotiate in bulk for the price of drugs?

GENTRY: I was at the agency, and that is just a non-negotiable item. For some reason, the pharmaceutical industry has managed to keep that at bay. And they have convinced them that they need the extra money, if we want to call it extra money, to do research and to create new drugs. And they say that no one else is doing that.

GERGEN: It is true. The pharmaceutical industry has to spend money on research to bring innovative drugs to market. That's very true. It's always been a question of how much do they need, and how do you get a fair balance here.

And the reason that Bob Russia and a lot of the liberals are so angry is they think the administration cut a bad deal with the pharmaceutical industry. The pharmaceutical guys kicked in $80 billion over ten years, whatever the number is, but the administration in return said we won't go and negotiate these other drugs down now. We won't go and try to bring in Canadian import. We're going to tie our hands and agree voluntarily to do that. And the left is off the wall about that kind of deal. It's not clear the White House can keep the deal in the Congress.

GUPTA: Another issue I think here is generic drugs as well. I mean, these are so much cheaper than brand name drugs. You know, seven out of ten prescription written are for generic drugs. They are about 80 percent to 85 percent cheaper. But it's amazing to me, some of the stories that I've heard, and may you've heard of this as well, a collusion that occurs between a brand name drug manufacture.

ROMANS: Oh, yes.

GUPTA: They will go to the generic manufacturer and say, we'll pay you "X" amount of money so you don't make the generic. The generic company, you know, they make their money, but the public suffers because they don't have access to this generic.

GERGEN: The industry I find most fascinating to watch in all of this is the insurance industry. They have followed a very clever, smart, shrewd strategy. And that is, last time around the insurance agency was one of the, was one of the villain, of the enemies of Clinton care and they helped to bring it down.

And this time around, the industry looked at the Democrats in 2006 and then won it big in 2008, and they said we're going to cooperate this time. And so they've gone in and say we will give up on pre-existing conditions. We will give up on any kind of discrimination. We're going to change our rules. We'll do that voluntarily just don't give us the public option.

GUPTA: Well, one thing they did ask for is this is also predicated on a lot more people being insured, if not everybody.

GERGEN: Right.

GUPTA: And the reason that's important is because a lot of the people that are going to come are these young immortals, healthy people who are going to make the insurance company money.

GERGEN: But actually, the trend right now, it may change going into politics, is that one of the biggest winners out of this can be the insurance industry.


GENTRY: Definitely. They're going to get more customers regardless how this happens.


COOPER: What about medical malpractice reform? A lot of folks say, look, you know, doctors have no incentive not to do a lot of tests because they're trying to cover themselves in the event they are sued.

GUPTA: Yes. And what's interesting is that, if you look at payouts, first of all, that's not a huge part of medical costs. This idea of defensive medicine might be. You know, I want to order more tests so I can protect myself. Some will says it's up to 15 percent of health care cost.

GERGEN: That's pretty big.

GUPTA: That's pretty big. But, you know what, I read that thing as I told David, and I don't see much talk about tort reform, malpractice.


GUPTA: Yes, nothing. And President Obama gave a speech -- Anderson, you remember it -- in front of the AMA where probably during that entire speech the only time he got booed at all was when he talked about the fact that he's not going to have caps on malpractice insurance claims. And he said, you know, people have been wronged in some way by medicine. They deserve to be able to have their day in court and be able to be rewarded. So you probably not going to hear much about that.

GERGEN: The trial lawyers are the ones who fiercely want to protect the right to sue all the doctors, and they're driving up cost. But the trial lawyers are extremely allied with the Democratic Party. And so the Democrats will not take them on.

If they want to make it truly bipartisan, one way to reach out to Republicans is to say, let's do something about all these lawsuits that are forcing doctors to do practice defensive medicine.

GUPTA: When we report about the American trial lawyers, they'll say that they don't believe the concept of defensive medicine actually exists. They says doctors don't say that they are going to order these tests to protect themselves, they're saying they are doing it in the best interest of their patients. I know. But that's the argument that they are representing.

GERGEN: An ear, nose and throat doctor told me here in New York that if a patient walks in and says, I would like an MRI, he does it automatically, because he says if I don't do it, I'm worried I might be sued if something goes wrong. So he says I have no choice. If they ask, I have to do it, even though I don't think it's a good idea.

COOPER: So when I go to the dentist, I can ask for nitrous oxide.


COOPER: Let's talk about big business. Most recently, a number of folks in the auto industry were complaining that, look, they have to subsidize health care where they are competing against people in other countries who don't, because it's government subsidize there.

Is that a fair argument?

ROMANS: It's a good argument, and it's something they've been making for years and years to no avail. Ant the way that you feel it and I feel it, is that in this country you haven't had your wages go up because the companies are paying these extra costs for health care and they're passing that along to you. They're giving you more for your health care coverage, and you're not getting it in your paycheck. You know, you're paying for it one way or the other.

GENTRY: But even people who are employed and are getting their insurance to their employer, if they think of what they were getting five years ago and what they were paying, whether it was a co-pay or what was coming out of their check, and they look at where they are now, five years later, same employer, they'll find that there are -- more is coming out of their check and that their co-pay has been increased. What do you think it's going to be five years from now?

ROMANS: And a lot of people who have health insurance through work, I think they don't get it. That if they have a catastrophic illness, it might not really cover everything that they think it's going to cover. When you look at the number of people who filed for bankruptcy, the number one cause of bankruptcy is medical cost. And, you know what, almost half of those bankruptcies are people who had health insurance. So you're covered, and you say, oh, I don't want health care reform because it's going to hurt me, but everyone really is one step away. Catastrophic illness really killing their family finances.

COOPER: We've been talking about change. What should stay the same? What actually works? I'll have that right after this.


COOPER: We're back talking about health care reform, which we should remind you is in many different forms right now. Many different bills being talked about on Capitol Hill. It is President Obama's extreme challenge. And why, we're talking about, why making any kind of change from better or worse is such a challenge.

People seems to be holding some contradictory notions on the subject. On the one hand, recent CNN Opinion Research polling shows 83 percent surveyed are satisfied with their health care. On the other hand, 77 percent believe that major changes are necessary to make sure all Americans have health insurance.

So is this a case of change the system, but leave me alone? Or something else at work here?

David Gergen, what do you think?

GENTRY: That's an interesting question. I think people very much, those 83 percent are fearful that health care reform will mean reform for them in giving up something, whether it means that their care is going to go down, if they are older or whether they think 50 million people are going to suddenly start flowing into the health care system, and they're not going to be able to see their doctor anymore. They're going to have to wait weeks to see a doctor.

COOPER: One of the many things, you hear in this health care town hall meetings, people saying, am I going to have to change my doctor? Can I keep going to the same doctor that I'd gone to that I like?

GUPTA: And, you know, what we keep hearing is if you have insurance, you're happy with it, you get to keep that. So you keep your doctor, you keep your insurance, probably work much in the same way that it works now for most people. For example, if you have an in-network doctor, you pay a certain amount, it will be slightly higher --

COOPER: But no one can guarantee that your doctor is going to continue with some form of insurance.

GUPTA: Well, that's true today.

COOPER: Right, which is true now.


GUPTA: You know, that not all doctors take Medicare for example. So, you know, if you go to Medicare and your doctor doesn't take that you would have to switch doctors. And that would probably be true with the public option as well. So I think that in that sense it would still be the same.

ROMANS: There's this real big trust issue right now that we haven't seen in a long time, a lack of trust. And when I talk to people on the radio show, where we talk to people and asked them, why are you so concerned or opposed to health care reform. It takes about three minutes to get to, and they said they were going to buy the toxic assets from the banks and they didn't. And you can see that people are looking over the past year, and they have been told one thing and something else maybe has happened. And they think that we are living in this world of big financial experiment and unintended consequences. They just can't --

COOPER: There is also real and legitimate fear about the role of government in our society. I mean, that now it's -- this seems to be in many people's opinion one more thing that government is now, you know, getting further and further involved. They own the banks. They own, you know -- they own the auto industry.

GENTRY: I think what they are not understanding right now, or what they are worried about is that what they have they're going to lose. Whatever it is, what they have, they don't want to lose.

GUPTA: It's sounds like a lot of people are satisfied with Medicare, right? But is Medicare going broke? I mean --

GENTRY: Medicare is going to run out of money.

GERGEN: That's called going broke.

GENTRY: I mean, it can't sustain itself the way it is. It would survive. (CROSSTALK)

GUPTA: And that's part of the concern. You just say, look -- I mean, look at what Medicare has become.

GENTRY: Right. And they look at that and they can say the good example and the bad example. The bad example is that that program has not grown from really the time it was created. It was created -- there's an acute care program to take care of sick people in a hospital.

GERGEN: I think one of the other aspects of this is very fundamental to who we are as a people. There are a lot of sociologists and historians will tell you we as American people are just different. We're an outliers measured in many ways. Our value system is different. We don't think like Canadians. We don't accept government the way it is. We're not deferential to authority the way Canadians are or in Western Europe.

And so, I think the Clintons misread that some, and I think President Obama has misread that some. When you come and try to sell something big, big government to the American people, they tend to be very, very weary of it. It's been true throughout our history.

GUPTA: Do you think health care is different, though. I mean, in the sense that if you say, no one wants to live in a country where people die of preventable diseases, where people not -- may not be able to get vaccinated. If you show up in an emergency room, you get turned away even if you have a life-threatening condition. And that sort of stuff happens. If that's the argument, as oppose to it's not about any of us in particular, that's not the country you want to live in.

GERGEN: Sanjay, I think -- I think there's no way that the American people will ever accept single-payer system, a government-run health care system for all. I just don't -- you know, I don't think we're like the British or the Canadians in that sense.

That does not mean you can't have universal coverage. It does mean you can have a very robust system in which poor people have a chance for protection and will have a chance for decent life. It does mean that -- in the American system, we tend to do that more through the private sector than through the public -- than through the public sector.

PAMELA GENTRY, SR. POLITICAL ANALYST, BET: And I think that's why the single-payer option was left on the table by this president. He knew that that was...

GUPTA: He did say that if he had to do it all over again, he would...

ANDERSON COOPER, CNN ANCHOR: For those who don't know, what do you mean by single payer?

GENTRY: That would mean that there is -- there is one place to go, one-stop shopping, and that's for Medicare. If they pay, every claim goes to Medicare. They pay every claim, and there is no option. GERGEN: Nobody has a private insurance.

GENTRY: Nobody has a private insurance.

What he wanted to leave on the table was that you'd have an option to use an Aetna, Blue Cross Blue Shield. And by the way, one of the options would be a government option and that's the one that's getting so much talk about now is the public option.

COOPER: In terms of other things that work, specialized medicine, high-end medicine is something that does seem to be working in this country. I mean, the quality of care is very good. People come from all around the world to be treated in this country. Things like brain surgery, heart surgery.

You're a brain surgeon. You know about this. Is that something that would be potentially affected negatively by reform?

GUPTA: Well, you know, it works really well for a certain percentage of the population. Not for everybody obviously, because people don't have access to it.


GUPTA: You know, if you look at the -- what people are saying who are supporters of this, they'll say it won't be affected negatively, that people would still be able to get that quality of care.

But it goes back to the earlier point. If you're trying to insure more people, cut costs, what effect does that going to have overall in the general level of access to these things?

There's lots of areas where there -- you know, we're good at things. I mean, children's health care, innovational overall, heart disease. I mean, we cut down heart disease death significantly which is a leading killer of people in the United States.

COOPER: What about preventive care. I mean, everyone says, oh, yes, of course, we should focus on preventive care. It's more cost effective down the road. But there's not a lot of money to be made in preventive care.

GUPTA: Medically and morally, it makes a lot of sense and people are trying to make the financial argument as well. But you're absolutely right. I think it's little bit hard to make that financial argument for lots of different reasons.

COOPER: Drug companies don't make money off people not doing something.

GUPTA: Well -- but you know -- and even more than that. I mean, so does that involve more screenings? And if we do more screenings on somebody, do you find something? If you find something, you have to do a biopsy. You have to take time off work.

It's hard -- it's a little bit hard to play it out, to make the economic argument. But having said that, you know, it still medically makes sense to keep people from getting sick in the first place.

GERGEN: One of the things that's lacking in this bill -- something to be addressed is, are there ways you can provide rewards to people who look after themselves, who live well, who exercise regularly, who don't smoke, don't drink to excess, because that leads to a lot of the health care costs we have in this country.


GERGEN: And see significant reductions.

COOPER: Don't they feel they get rewarded enough? They're the ones who get better job.


COOPER: If you're obese, you're less likely to be paid as much as someone else you work with.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: (INAUDIBLE) The president said, you know, we want to see financial incentives for people for healthy lifestyles. We want to be -- even cash financial incentives for people who are working out. He held up companies as an example that really push their...

COOPER: I just talked to the head of the Cleveland clinic, which doesn't -- does not hire people who smoke. Yes. Because, you know, they want to set an example.

GUPTA: I just want to -- you have people who have access to everything. The best insurance. They have money. They can hire trainers and are still overweight or obese. The idea of legislating through incentives or whatever else to change behavior is a tricky proposition.

I just don't know if that will work.

GERGEN: But, Sanjay, we've managed to get people to buckle up. We've managed to get people, you know, to stop smoking.

GENTRY: But that -- well, you know what, that's public health. I'm just about to say...


GENTRY: What we haven't done is we haven't merged health care with public health. That's what we haven't done. And the types of things we're addressing now is, you know, getting vaccines or obesity, or exercise. Those are public health issues. And we never merge those two in this country.

COOPER: How true is it that when you go to an emergency room in any city, no doubt you see people who are using that as primary care, is that correct?

GUPTA: Absolutely. No question about that. COOPER: And how much of a drain on the system is that?

GUPTA: It's a huge drain. And, you know, we're talking about Massachusetts earlier. It continues to be a huge drain on Massachusetts even though you have 97 percent of people insured. They're still using emergency rooms as a first stop for primary care.

COOPER: Even with 97 percent insured?

GUPTA: Yes. Here's the problem. We don't have enough primary care doctors in this country. We're about 16,000 primary care doctors short. So, you have insurance now. If you can't find a doctor or find a doctor who gives you an appointment, it may not be as much value as you think it would be.

GERGEN: That is why in many ways, Anderson, the president has started talking about this. It's about health insurance reform instead of health reform. It's not comprehensive in the sense of trying to change the whole system. It is -- it is really focused more, this bill is, on insurance and how the insurance system works for everybody.

COOPER: Which really gets nothing to cost and actually lowering cost.

GENRGEN: Well, it doesn't get to the preventive side. It doesn't get to some of these questions of lifestyles and how do you -- how do you give more young people incentive to become primary care doctors, because primary care doctors are the worst paid doctors. And, you know, if you go in and do, you know, a facial things on people, you make a huge amount of money. You got to change the incentives.

GENTRY: It's called plastic surgery.

GERGEN: Plastic surgery. I'm sorry. I wasn't -- I wasn't -- I wasn't even stretching for that.

COOPER: When we come back, we're going to talk about the money. Who's going to -- how is this going to be paid for? How much is all of this going to cost? We'll crunch the numbers ahead on EXTREME CHALLENGES.


GARY TUCHMAN, CNN CORRESPONDENT: Gary Tuchman here at CNN Center in Atlanta. Back to EXTREME CHALLENGES: HEALTH CARE shortly.

First, to "360 Bulletin."

And dramatic developments in the Michael Jackson investigation. Agents for the Drug Enforcement Administration today raided the Mickey Fine Pharmacy in Beverly Hills. The pharmacy sued Jackson in 2007, claiming the singer owed more than $100,000 for prescription drugs.

And related news, Jackson's funeral has been postponed until September 3rd. A spokesman for the Jackson family gave no reason for the delay. Fed chief Ben Bernanke today with hopeful words on the economy, saying, quote, "Prospects for a return to growth in the near term appear good." He warned, however, that any recovery would likely be slow.

Sales of existing homes grow 7.2 percent in July, the fourth straight monthly increase. The Dow gaining 155 points, the NASDAQ up 31 and the S&P posted a gain of 18.

And the government's highly popular Cash-for-Clunkers program runs out of gas this weekend. Dealers have until 8:00 Monday night to file their final claims.

That's the news this hour. Back to EXTREME CHALLENGES right after this.


COOPER: So here is perhaps the biggest challenge President Obama faces on health care reform. His challenge, our challenge and possibly the sharpest case to make against change in this system now namely paying for it. The price tag is immense.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We will make sure that no insurance company or government bureaucrat gets between you and the care that you need. And we will do this without adding to our deficit over the next decade.

MICHAEL STEELE, RNC CHAIRMAN: Here's my question, how come the Democrats plan to save money will cost us more money. How come their plan to reduce health care cost will cost us trillions more in tax dollars?


COOPER: Well, somebody will pay. The president wants it to be the wealthy. And as you heard at the top, he also warns the cost of to everyone, rich and poor, of doing nothing. It's hidden to most of us, of course, but getting larger everyday. According to the non-partisan Kaizer Family Foundation, the cost of insuring a family has more than doubled since 1999, and the portion picked up by you, money straight out of your pocket, is up 117 percent.

Why have health care costs gone up so dramatically?

ROMANS: Think of hip replacements and think of stints and statins, and think of all the things you can do now that are expensive that you couldn't do ten years ago, fifteen years ago. You've got baby boomers who are aging. More and more people using more expensive care. And you made a very good point earlier. You've got 20 percent -- 80 percent of the cost, and that's a big cost in one part of the, one part of the demographic. And that part of demographic is only getting bigger, by the way.

GENTRY: Right.

GUPTA: No one does it particularly well in terms of controlling cost. You know, the public system, the private system or other countries in the world. And just about everywhere, you have health care costs outpacing inflation just about everywhere you go.

GERGEN: At the high end we deliver terrific care for people who can afford it. We are very, very good at that. But we do know, we've got one of the least efficient systems in the industrialized world that we spend far more per person and get less for it than other major industrialized nations.

You know, people in other nations pay less and they live longer. So the system needs to be changed. The way you have to change that is probably change the incentives for doctors to do all these extra things. Right now, there are not enough kind of incentives to do just what's needed but no more.

GUPTA: This term, it keeps getting thrown around, comparative effectiveness.


GUPTA: Which I think is really interesting. I mean, for example, if you are taking a statin medication, you want to know at the end of the day, is this going to make me live longer.

COOPER: Something like a Lipitor.

GUPTA: A Lipitor to reduce cholesterol. Is it going to make you live longer? Is it going to reduce my chance of a heart attack? Is it going to do certain things? That's why you're taking the medication. You'd be surprise how hard that is to proof.

GENTRY: Everyone who has written one of these novels has something in there about best practices, comparison. You know, we're going to reward those that are making a difference. And, again, the problem is going to be how are you going to measure it. How will you know?

GUPTA: But that's where this idea that someone will come between you and your doctor also comes. Because of the comparative effectiveness, study shows, you know what, doing a stent really doesn't make that big a difference there. You as a patient go and say, I should be getting a stent. So, you know what, actually, it doesn't look like, like it makes that big a difference, Anderson. You're not going to get it.

COOPER: This notion, though, getting back to how all this is going to paid for, that greater efficiency in the system is somehow going to help us pay for this, or more preventive care is going to help us pay for that. I mean, that's not factually correct, or that's not factually provable at this point.

GUPTA: I think that's the way this ends. It's very hard to prove that. Is a healthier society like that? Again, medically, morally, it makes perfect sense, but from a financial, economic argument, it's tough to prove. GENTRY: I think the biggest blow the health care reform took was after -- they started writing the bill, they sent it over to Congressional Budget Office to make an assessment. How much is this going to cost him? And are we able to pay for it. And the Congressional Budget Office came back and said this doesn't add up. You don't have the savings here that you save.

GUPTA: 240 short.

GERGEN: You are 240 short. And, you know, we can't say with surety that that experiment nationwide is going to work.

COOPER: Oh, the issue of cost, of course, stirring anger at town halls. So what are issues that, well, aren't issues at all? Phony fears, myths, things that are not actually contained in any of the reform plans. We'll take a closer look at the fiction and the fact after this short break.


COOPER: Part of President Obama's extreme challenge in pushing health care reform has been the game of whack a mole he's had to play, knocking down myths that spring up about the various programs that are being discussed. Only it's not a game.


SEN. CHUCK GRASSLEY (R), IOWA: I don't have any problem with things like living wills, but they ought to be done within the family. We should not have a government program that determines you're going to pull the plug on grandma.


COOPER: Senator Grassley there took a fair amount of heat, including tweets from his old GOP colleague Arlen Specter for amping up legitimate concern, terminal illness and aging family members.

There are others mistrust of big government or simply not having enough resources is contrary to go around. A lot of fears, but we've got facts to meet them.

Let's start with the most controversial issue, the idea of death pageants. We talk about this a little bit. Let's take a look.


UNIDENTIFIED FEMALE: I understand that a federal health board will sit in judgment of medical procedures and protocols to impose guidelines on all providers when to withhold certain types of care.


COOPER: For a fact sake, is there any truth to that?

GUPTA: First of all, she's sort of overlapping two things here. This idea of, again, comparative effectiveness, this idea of determining what types of procedures will be funded, that sort of thing, with this idea of end of life counseling. They are calling it death panels.

I mean, it's a hyperbolic term.

COOPER: No said -- the critics are calling it death panels.

GUPTA: Right.

COOPER: No government official or anyone that's actually doing it.

GUPTA: No, they're calling it end of life counseling. And I think death panels sort of conjures up this image of a firing squad. I found it very hyperbolic when I first heard it. But, again, you know, this idea that end of life counseling would be paid for as part of this, and the two things about it is you don't have to accept the end of life counseling and you don't have to act on it I think is very important.

Studies will show, though, that again, you know, if you get end of life counseling, elderly people are more likely to be less aggressive with their care after they hear about all that may be in store for them.

GERGEN: In Britain, for example, if you're elderly and you're 85 years old and you go in with, you know, cancer problem, they may well tell you, we're not going to do surgery. You should just go home and...


COOPER: But, I mean, frankly, aren't there already death panels in America. I mean, there are insurance companies which determine who gets treated and what is going to be covered and what's not. And those are life and death decisions.

GENTRY: Yes. Insurance companies also have limits on how much money they will spend on you. And if you reach that certain amount that they've designated, they're done. And so, if you wanted to continue your life and you're out of money, I guess they would be put in that category as well.

GUPTA: And people keep bringing up the idea of rationing. But, I mean, you're absolutely right, rationing does occur already. I get these letters all the time from insurance companies saying, you want to do a cervical spine procedure on this patient, great, except we're not going to pay for it. It's a form of ration.

GERGEN: The other ration is for people who are uninsured.

GUPTA: Absolutely.

GERGEN: They're in effect. There's rationing. They don't get a certain type of care.

COOPER: Let's look at another myth, whether illegal immigrants would be covered under some sort of health care reform.


UNIDENTIFIED MALE: I believe the polls show that most people are happy with their health care. There's a few problems, the illegals. They shouldn't even be here. Let alone...


I would ask Congress to do something to send them home so we don't have to deal with them.

UNIDENTIFIED MALE: I have a simple yes or no question for you today. Will you ever vote for a bill that gives non-U.S. citizens access to a taxpayer paid free health insurance.


COOPER: What's the answer?

GERGEN: This bill will not provide insurance for illegal immigrants in this country. What I think is less clear to people is whether you're here as a non-U.S. citizen legally, and my understanding is it, we'll provide insurance for those people.

GENTRY: Yes. If you're here legally...

ROMANS: If you're here legally -- legally, right.

GUPTA: And if you're a child.


GUPTA: Children as well. But it gets murky if, for example, someone is married to an undocumented worker.

GERGEN: Right.

GUPTA: What happens to that couple? What happens to their children? All of that sort of gets a little bit more murky.

GERGEN: And nobody is going to give illegal immigrants insurance.


GERGEN: Paid for by taxpayers.

ROMANS: No, they're not. They're not.

GUPTA: Christine's point is that if it's an economic argument, again, that uninsured people cost more money because they show up in the emergency room, they use those services. If you're making the economic argument, then it does make sense to cover everybody. Because they're still going to utilize the health care system, even as undocumented workers.

GERGEN: It's political.

ROMANS: Politically.


GUPTA: Correct.

COOPER: Let's talk about the other issue that's drawing a lot of heat at town hall meetings. Abortion.



UNIDENTIFIED MALE: Abortion is not health care. It is not health care. Has not been, and, ladies and gentlemen, fellow citizens, if this thing passes, you and I and every other American, whether we support life or not, we'll be paying for abortions.

UNIDENTIFIED FEMALE: I did not want to pay on a health care plan that includes the right for a woman to kill her unborn baby. Is it true that this plan is in the health care bill?


COOPER: Well, Senator Claire McCaskill said in a town hall just a couple of weeks ago that no federal money would be used to fund abortions.

Is that true? I mean, there's this Hyde Amendment which makes it illegal for -- says no federal money can be used to fund abortion.

GUPTA: Right, except for incest, rape or mother's health. It's a little bit confusing. I really tried to study this. I think what it says that federal funding through the exchange, for private insurance companies won't necessarily fund abortions. It says that private insurance companies can say they won't, but they're not forbidden from funding abortion.

With regard to the public option, if that ever materializes, it seems like a lot of that comes under the authority of the Secretary of Health and Human Services. So you could potentially have federal dollars through the public option potentially funding abortion. I think that maybe where a little bit of the rub is here. But let me tell you, Anderson, I spent several hours reading through these paragraphs to try and even narrow that down to that.

COOPER: There's no one bill for us to really be able to point to and say, well, this is --

ROMANS: Exactly.

GUPTA: Wait, I read that for nothing?



GERGEN: Warm up.

COOPER: But certainly that, if it does turn out, that it is possible to have some federal funding for abortion, that would be...

GERGEN: That would be a lightning rod.

COOPER: ...incendiary.

GERGEN: It will be a lightning rod.

COOPER: Well, coming up next, the bottom line, what happens now, and what happens next?

We'll be right back.

(COMMERCIAL BREAK) COOPER: Back with the big picture on President Obama's extreme health care challenge and what it means for all of us.

So, where do we go from here? What happens next?

GERGEN: Well, Anderson, we have a big job that's unfolding the rest of the year. And I think what's been significant over the last few months is that a proposition, which started with a lot of momentum, just has now lost a lot of them. Resistance is growing.

The same thing did happen to the Clinton health care plan. There was a widespread support for it in the beginning. And as the argument unfolded, support evaporated.

COOPER: Do you think Democrats may go it alone?

GERGEN: Even if the Democrats go alone. I think the chances are growing that they will go for something more modest than what the president wants. I think it's -- and there is a growing chance we're going to have a complete failure.

GENTRY: And I think the others -- I think other people who are actually supporting health care reform, whether they were in the private sector or the public sector, they weren't very vocal. They just assumed that this was going to roll along and that information was going to get out there and people would understand what was benefiting them, the parts that were benefiting them, and that didn't happen.

ROMANS: Explaining to people about what it's going to mean for their taxes and for their care and their benefits and their coverage and their own money. And we can't answer some of those questions because there are several different bills from the committees. And we don't know what it's exactly going to look like yet. And people just are skeptical that they're going to have to give something up.

GUPTA: There's still a lot of support, perhaps. We obviously play a lot clips from people who are not in favor of this. And these town halls, I think it really stimulated a lot of that conversation.

But remember, this is different from '93 in that President Obama has the support of Pharma. They have the support of AHIP, which is the American Health Insurance Providers, the American Medical Association. These are organizations that have typically not been supportive of this type of health care reform.

So, this is different in some ways. And, you know, it's tough to take the temperature of the country on this. What we're seeing a lot of these outbursts. And I think they sort of become emblematic.

COOPER: You think there will be some form of reform whether...

GUPTA: I think there would be something. I think there would be something.

COOPER: Do you agree with that, Pamela?

GENTRY: Yes, I agree with that. I don't think it's going to go away. Business needs is almost as much as the public needs it.

COOPER: David, do you think it could go either way?

GERGEN: I think we're almost on a knife edge on this. And I think -- I think the president has to now take charge of the conversation and the negotiations and not just leave it to a lot of other people. Otherwise, I think the chances of failure will rise.

COOPER: It's been an interesting discussion. Christine Romans, Pamela Gentry, Dr. Sanjay Gupta, David Gergen, thanks very much. Good discussion as always. Thanks for joining us. Wish we had a little bit more shouting, but, you know, that's outrageous.

We hope you've come away with some of what you need to make better decisions about such an important issue. We'll see you next time on EXTREME CHALLENGES, and as always, on AC360.