HIV AIDS Resource Guide/HIV-AIDS Resource Guide.iso/STAT/PROP_FED/BRIEF.ASC

Text File | 1993-01-14 | 42KB | 838 lines

/* The White House has provided a great deal of information which
it believes shows the wisdom of their health care proposal. A
press briefing held 10/6/93 follows. */


THE WHITE HOUSE

Office of the Press Secretary

______________________________________________________________
For Immediate Release    October 6, 1993


PRESS BRIEFING
BY
ASSISTANT TO THE PRESIDENT FOR ECONOMIC POLICY BOB RUBIN,
COUNCIL OF ECONOMIC ADVISORS CHAIR LAURA TYSON,
SECRETARY OF TREASURY LLOYD BENTSON,
SECRETARY OF LABOR BOB REICH,
SMALL BUSINESS ADMINISTRATION HEAD ERSKINE BOWLES


The Briefing Room


1:35 P.M. EDT


     MR. RUBIN:  I'm Bob Rubin.  I'm the Assistant to the
President for Economic Policy.  As you know, we're here today to
talk about health care reform and its relation to the economy.

     As the President said in his address to the Joint
Session, health care reform is a social imperative, but it's also
an economic imperative.  And it's a critical and integral part of
his total economic program.

     I remember when I first was asked to take this job and I
started talking to the then President-elect about economic issues,
and it was apparent from the very beginning that when he thinks
about economic issues his mind immediately, amongst other things,
turns to health care.  And he views it as inextricably and
integrally related to the economic future and health of this
country.

     Today you'll be hearing from various members of the
economic team as to why he feels that way and how we view health
care reform in relation to economic growth, job growth, and why we
view health care reform as critical to the economic future of this
country.  We're also handing out -- maybe we've already handed
out, I believe, two written pieces; one, the cost of failing to
reform health care; and the other, the economic effects of health
care reform.

     The order of speaking will be Secretary Lloyd Bentsen;
then head of the CEA Laura Tyson; Secretary Bob Reich; and head of
the SBA Erskine Bowles.
     Let me make one very brief comment myself, and my own is
a very practical perspective.  I remember during the transition we
had a health care presentation, and afterwards I turned to Ira
Magaziner.  At that time he wasn't in charge of health care yet.
I said, you know, it's a funny thing.  Virtually every SEO that
I've spoken to in recent years -- and I'd spoken to enormous
numbers of them because I was in the financial service industry
before I came here -- has said that escalating health care costs
are one of the major problems of their company.  Virtually every
CEO that I had spoken to -- and as I said, I'd spoken to enormous
numbers of them -- viewed the escalation of health care costs as a
tremendous impediment with respect to international
competitiveness and exports.  And exports, as you know, are
critical to economic growth -- have been in recent years and
certainly will be in the years ahead.

     So I had the feeling then, and I've had it evermore
since then, that we simply have to get health care costs under
control if we're going to have the kind of economic future we want
to have.  Secondly, there are nonquantifiable aspects of health
care security and universal coverage which are of great importance
economically.  A healthy work force is a better work force.  You
have lower turnover, lower absenteeism.  You can't quantify these
things, but they're very important.  And, finally, as Erskine
Bowles will discuss, there's no question in my mind that when the
small business sector focuses on health care reform and
understands it, and understands how it relates to their long-term
prospects, a great preponderance of small businesspeople will be
in favor of health care reform.

     With that, let me turn the podium over to Secretary
Bentsen.  What we'll do is go through all our speakers first, and
then when we're finished, we'd be delighted to take questions.

     Mr. Secretary.

SECRETARY BENTSEN:  Thank you very much, Bob.

     The message this afternoon is really quite simple.  The
long-term health of our economy is absolutely dependent on health
care reform.  Now, we're going to have the economic effect on jobs
discussed by Bob and Laura later.  And, also, they'll be
discussing what happens if we don't have health care reform, how
that affects the economy.  And Erskine will be talking about how
it affects business.

     Now, let me say just a few things.  We have the most
wasteful health care system in the world.  You've heard the
numbers.  We're spending now 14 percent of our gross national
product on health care.  Our major competitors are spending six to
nine percent, and we're no healthier.  And not only do the other
countries spend less, they cover everybody.  We're the only major
industrial nation that does not provide full universal health
coverage.
     Thirty-seven million Americans without health insurance.
And that number is continuing to grow.  But don't kid yourselves.
You're paying for every one of those uninsured.  When CBS, NBC,
ABC, CNN or any business that pays insurance gets the bill at the
end of the month, they're picking up the tab for that uninsured
parent who takes that child to the emergency room at the hospital
at the last minute.  In Texas, I know of one hospital that has $42
million worth of uncompensated care.

     Well, they're going to pay for it, alright.  You're
going to pay for it.  And you're going to pay for it right through
the nose, in increased costs for surgical care, anesthesiologists,
the beds, the hospital rooms.

     One other point.  We're hurting wages.  If health care
had remained the same share of employers compensation to the
employee from 1975 to '93, the average American worker would get
an annual $1,000 pay increase after taxes, with no extra cost to
the employer or to the business.  If current trends continue
without reform, real wages may be further reduced by $600 per year
by the end of this decade.  So we have to fix it.  We have to stop
that cost-shifting.  We have to cut the waste, and we have to
restructure the system so that the resources are used more
efficiently.  And we have to bring some competition into health
care.

And with that, let me turn it over to Dr. Tyson.

     DR. TYSON:  Thank you.  I think it's important to begin
a discussion of the economic effects of our health care plan with
a simple fact:  Most American companies, even most small American
companies, already provide health care coverage for their
employees.  For most of these companies, the Clinton plan will
ultimately mean lower costs, not higher costs, for the same or
better benefits for their employees.  So this is the starting
point.  This is where we begin.

     Most American companies provide it already; even most
small American companies provide it, and the plan will ultimately
lower cost for most American companies while providing better
benefits for employees.  That's the reality.

     There have been allegations from critics of the plan
that it will cause net job loss because it involves an employer
mandate, meaning that firms who are not currently providing
insurance will need to contribute to the insurance for their
employees.  Certainly, for those firms who are not currently
providing, the result of the plan will be an increase in costs.
We have taken that into account by designing a very generous
discount scheme, particularly designed to help small firms and low-
wage firms deal with the additional cost of providing the coverage
that will be required.  But many more firms will actually see
their health cost situation improve over time, especially those
small firms who are currently already providing.
     And remember I said the majority of small firms already
providing.  They are paying something on the order of 35 percent
more for health care coverage than their big firm competitors.
For these small businesses, our plan actually will mean an
unexpected windfall.  And there are many small businesses out
there, according to some surveys, as many as two-thirds of small
businesses currently not providing insurance would like to provide
insurance.  It's not that they don't want to, but given the way
the insurance market is currently organized the costs are simply
impossible for them to bear.  So for many small companies who
don't provide insurance, we're going to offer them an opportunity
to provide insurance in an affordable fashion with discounts from
us, and to thereby attract more talented workers than they might
otherwise be able to attract because they currently cannot afford
to offer health care insurance.

     So, overall, our plan is a bonus to the business
community and will level the playing the field in the business
community; will level the playing field between small businesses
that currently provide and those who do not currently provide, and
between small businesses who provide and pay a whole lot right now
and their large business competitors who are getting better rates.

     Now, because of all these beneficial effects it's
important to emphasize that there are many aspects of the plan
that we believe will tend to encourage employment over time.
Remember the critics have emphasized the idea that this may
discourage employment.  There are many factors in the plan that
will encourage employment, because the majority of firms will see
a cost improvement over time and they can respond to that cost
improvement in a variety of ways:  They can offer their workers
higher wages.  They can employ more workers.  They can see higher
profits.  They can invest more.  They can lower prices for their
customers.  There are lots of ways that firms can respond to cost
reductions.

     We believe that some of that response will be an
employment response.  Much of it will be a wage response.  But the
models that exist don't allow you with any precision to
distinguish which response will be the dominant response.  The
basic point again is that most American businesses will enjoy cost
reductions, and that will, of itself, tend to encourage employment
opportunities and higher wage employment opportunities.

     Second, the plan will certainly generate an increase a
net employment in the health care sector itself.  We estimate that
early on, by 1996, there should be a net increase in the range of
400,000 workers in the health care industry.  As cost savings
begin to accrue in the health care industry we will see a slow-
down in the rate of growth of employment in health care, but never
an absolute fall.  What we are doing here is we are shifting
resources into the health care sector up front and then slowing
down the rate of increase over time.  So the net effect on
employment and health care should be positive in the short run.

     Another aspect of the plan which encourages both
employment and mobility deals with the phenomenon of job lock and
the incentives for workers to switch jobs or to start a new
business on their own.  We currently have a situation in which an
estimated 30 percent of the work force have indicated that they
feel locked to their jobs because of the fear of losing continuous
health insurance should they change their employment choice, or
feel they cannot begin a new self-employed activity because self-
employed individuals have to pay exorbitant nongroup insurance
rates and don't get full tax deductibility of their health
insurance premiums.  So we are going to make the work force more
flexible, reduce job loss and increase the opportunities for
people to start new self-employed activities.

     The plan will also reduce welfare lock.  We have welfare
families who would like to leave welfare and go to work.  But if
they leave welfare and go to work, they will lose their Medicaid
benefits.  That is a very serious deterrent to moving people out
of welfare.  So by reducing welfare lock, we will, in fact,
encourage a growth in, or a movement out of welfare into the work
force.

     Now, when you think of all of these effects, you reach
the following general conclusion.  There are many aspects of our
plan that tend to encourage employment over time.  There are some
aspects of the plan that tend to discourage employment, and there
are certainly aspects of the plan that tend to change the
composition of employment.

     We've spent considerable time going over the plan,
analyzing the plan very carefully, looking at all of the existing
models out there for assessing these effects.  We concluded that
the models are highly imperfect.  There is no model out there
which can incorporate all of the pluses.  None of the models
actually incorporate any of the pluses that I mentioned in
assessing the employment effects.

     So by doing an analysis, we've concluded the net effect
on employment is likely to be very small.  But you're going to
have some positive employment-generating effects, you're going to
have some negative employment discouraging effects.  The net
effect on employment is likely to be very small.

     Moreover, it is true that over time, those factors which
would tend to encourage more employment will strengthen, and those
factors that would tend to discourage more employment will weaken.
So, over time, the calculus moves more and more in the direction
of net job creation.  Our position is the net effects are likely
to be small.

     Now, having said that, let me address the issue of why there
are some studies out there, estimating losses in the range of 3.1
million jobs.  We view these studies as flawed for a variety of
reasons.  First of all, they're just erroneous.  They are based on
errors about our plan.  They do not take into account our
subsidies, they overstate what the premium costs of our basic
benefits package would be.  They don't take part-time workers and
treat them the way we would treat part-time workers.  So they've
just got some errors in their analysis.

     They also make some technical economic assumptions which
we find to be unreasonable, inconsistent with the existing
economic literature.  They overestimate how sensitive firms are in
their employment decisions to a change in employment costs.  Those
are parameters that economists use all the time.  They chose,
instead of estimates that we don't -- we think are unreasonable.

     And, finally, and most profoundly, the models that are
being used out there simply do not incorporate any of the
beneficial effect on employment that I've already listed for you -
- welfare lock, job lock, the effects on the majority of firms
will see a reduction in their costs, and the fact of a net
increase in employment and health care industry itself.  Those
effects are simply not in the model.

     So we really -- although we, ourselves, believe that the
employment effects are likely to be small, we are certain that
these very large numbers are just wrong, and they're wrong for all
of the reasons I suggested -- technical failures, economic
assumption failures, and the failure to take into account the plus
sides of our plan.

     Finally, let me just end by emphasizing that employment
is not the only standard by which the health care plan should be
evaluated.  It is a standard, but it is not the only standard.  We
want to worry about the security and health of the American work
force, because to do that will give a more productive, more
flexible American work force, and ultimately, productivity and
flexibility determine high wages.

     So the wage opportunities we can offer our work force
over time depend upon how secure they are and how healthy they
are.  Secondly, we are addressing inefficiencies, very large
inefficiencies in one-seventh of the national economy -- the
health care sector.  If we do nothing to reform health care over
the period 1993 to 1996, 40 percent of the growth in our per
capita GDP will be gobbled up by health care spending.  And even
with that, the number of uninsured will rise, and even with that,
we will continue to lag behind the other advanced industrial
countries in terms of indicators like life expectancy and infant
mortality.  So something is wrong with the health care sector.

     To reform, to make one-seventh of the economy more
efficient presents a tremendous boon to the rest of the economy.
Because, ultimately, our living standards depend upon being
productive and using our very scarce resource very efficiently.
So we have to reform the health care sector to do that.  That's
another way we'll get higher living standards for all Americans.
Thank you.

     SECRETARY REICH:  Let me try not to repeat what Laura
said, and to provide a little bit of a conceptual framework with
regard to the kinds of job issues.  There really are four separate
job consequences with regard to any health care plan.  One of the
consequences has to do with competitiveness.  And it was mentioned
already, but let me mention it again in the context of the
international economy.

     American firms are now burdened in a way that most other
firms and most other nations are not.  American firms have a huge
health care cost -- over $200 billion a year and rising very, very
rapidly.  That means that the cost per product in the United
States is apt to be much higher than the cost per product
emanating from another country.  That makes us less competitive.
When we get health care costs under control, we are making
American industry more competitive.  When we get health care costs
under control, we are giving American industry, in effect, more
money with which to invest, to provide higher wages, to generate
more jobs.  And that competitiveness effect should not be
underestimated.  That may be one of the most important
consequences of all.  That's category number one.

     Category number two has to do with the jobs that are
moving into health care and moving out of the number of
individuals who will be moving into the job market and also out of
the job market.

     Specifically, reference has been made to job lock and
welfare lock.  Undoubtedly, there will be many people who, right
now, feel that they cannot get the kind of job that they want or
are entirely qualified for a much better job than they now have,
should be able to move on to higher responsibility, but are unable
to because they fear that if they lose their present job, they
will lose their health insurance.  That is job lock.

     If we eliminate that kind of job lock, we improve the
allocation of labor in this country.  We create a better match
between what people are able to do and where the jobs are.

     Welfare lock has already been alluded to.  Many people
are on welfare, they would like to get off welfare, they would
like to join the job market.  They can't and won't because they
are so afraid of losing their health insurance.

     Number three, there are individuals, and there may be
quite a few, who would like to start their own businesses, who
would like to leave perhaps large businesses, start their own, but
again, fear of losing their health insurance, difficulties with
regard to affording health insurance on their own prevent those
small businesses from forming.
     And number four, on the other side you have potentially
early retirees, people who would be moving out of the job market
in an earlier time than they are now in the job market because
they have access to health insurance.  They're afraid now to leave
because they don't want to lose the health insurance that is
provided by their companies.

     So these are the employment effects in terms of people
coming into the employment force, people coming out of the
employment force.

     The third category has to do with actually occupations,
the kinds of occupations that will be created and the kinds of
occupations that will be stopped or eliminated or reduced.
Undoubtedly, the purpose of much of this plan is to reduce
paperwork.  We have in this country now a fairly sizable paper
health care industry.  A lot of people in insurance, clerical
workers, people who are putting data into computers and taking
data out of computers, who are monitoring forms.  This does not
generate health care.  This generates the monitoring of health
care.  These jobs would not grow as fast; in fact, many of these
jobs may be eliminated.

     On the other hand, you have in the health care industry
itself in terms of the provision of health care many, many more
jobs.  It is likely, for example, that the home health care
industry is going to grow dramatically.  There's reason to believe
that it's quite inefficient to have a lot of people in hospital
beds who are now in hospital beds.  They could do much better at
home.  If the incentives were correct, they would be at home.
They would be at home attended to by home health care workers, and
that cost would be cheaper than keeping them in hospital beds.
It's likely that, for example, the occupation of home health care
worker will increase substantially.

     And finally, the fourth category, low-wage workers,
workers who are at the bottom of the income scale.  We have tried
to arrange the discounts, we've tried to arrange the costs to
employers in such a way that any negative employment effect for
those very low wage workers right at the minimum wage would be
eliminated, or if not eliminated, almost eliminated.

     Remember that we're talking about, at most, 35 cents per
hour; more likely, for the minimum-wage worker in the small firm
in the range of 15 cents an hour.  If you add that to the minimum
wage you're not even back to what the minimum wage was in real
inflation adjusted terms during most of the 1980s.  Thank you.

     ADMINISTRATOR BOWLES:  I think the economic information
that we've heard here today simply reflects what I've heard as
I've traveled around the country over the last several months
talking to literally thousands of small businesses.  And that is
that these small businesses, the vast majority of them, will
absolutely experience a much lower cost of their health care and
be able to provide the same or better coverage.  So it really is a
twofold benefit that's reflected in these numbers that are
presented today.

     Not only will the small businesses have lower cost and,
therefore, be able to redirect those scarce capital dollars into
being able to go out and hire new employees and make capital
expenditures and grow their businesses, but also they'll be able
to have a happier, healthier, more productive -- and the key word
is more productive -- work force.  So it's a real double benefit
for small businesses from the health care plan.

     I should add that it's hard for me to imagine that you
can design a system -- or I should say a nonsystem -- that is more
anti-small business than the current nonsystem this country is
operating under.  Today, small businesses experience annual
increase in cost of health care of 20 to 50 percent a year.  Small
businesses today pay 35 percent more for the same health care
coverage that big business does -- 35 percent more.  And the rate
of increase in the cost of health care for small businesses is 50
percent higher than the rate of increase for big businesses.

     And what are small businesses -- what are we able to buy
for these skyrocketing increasing costs?  Almost nothing.  We end
up being able to buy or afford a very bare-bones plan or something
where the deductible is so high that all we end up having is just
catastrophic coverage.  And we're also subjected to all of the
other abuses in the health care industry -- everything from
occupational red-lining to exclusions for preexisting conditions.

     And as I talked to small businesses, I heard over and
over again that they had tried on their own everything they could
to hold down the cost of health care.  They tried switching
programs.  They tried managed care.  They tried self-insurance.
They tried reducing benefits, passing on a bigger cost to their
employees.  Nothing helped.  The cost of health care continued to
escalate and the abuses remained there.

     And let me just reaffirm what Secretary Bentsen said:
Without universal coverage, believe me, there is no cure for the
small businessperson, because the uninsured will continue to get
health care, but they'll simply get it at the hospital at four or
five times the cost it would be at the doctor's office.  And who
is that cost shifting on the back of?  It's shifting on the back
of a small businessperson who's paying 20 to 50 percent more a
year for their health care cost.

     The President's plan really does do a lot to help small
business.  The key thing it does in my opinion is it really -- it
shifts the power of the marketplace.  It changes the supply and
demand equation in favor of the consumer and the small business
owner and away from the provider and the insurance company.  It
really does; it shifts the power of the marketplace.  It gives us
some control over our destiny.

     And this plan also gives small business for the first
time what they've really looked for -- it gives them a chance to
go out and buy rock-solid real insurance, comprehensive coverage,
coverage that is just as good as that offered by most Fortune 500
companies -- not a bare-bones plan, not just catastrophic
coverage, but real insurance.

     And the other thing it does is it makes that insurance
affordable.  That's why the President fought so hard for the caps
and subsidies there, to hold down the cost of health care so it
would be affordable to small businesses.  And the mechanisms are
built in there to hold down the cost of health care so it doesn't
grow at 20 to 50 percent a year.  And the system prevents the kind
of abuses of occupational red-lining and exclusions for
preexisting conditions.  And it finally puts the self-employed on
a level playing field with everybody else, where we get a 100
percent deduction for our health care costs instead of a 25-
percent that's fair today.  And the last thing it does, it
controls the cost of worker's compensation insurance, which really
is the only item on most small business' income statements that
are escalating at a greater rate than health care cost.

     I do believe that when most small businesses that I have
talked to lay this plan side-by-side with their current plan, what
they all say, almost without exception, is they see lower cost and
they see better coverage.  This plan is good for small business,
it creates jobs, and I'm excited to have a chance to support it,
also.

     Why don't we do this in the interest of order?  I'll
call on people, then we'll just refer the questions to whoever
feels best equipped to answer them.

     Q Did Congressman Cooper send over his plan for your
perusal?  What do you all think of it, and can you pass anything
without the four dozen votes that were already behind him in the
house?

     SECRETARY BENTSEN:  Well, I think Congressman Cooper's
plan certainly contributes to the debate in a meaningful way.  But
it has some serious problems.  One of them, it does not have
universal coverage.  And as Erskine was just saying, you're going
to see the cost-shifting take place, and you'll see small business
bear the brunt of it.  And they will have, themselves, higher
costs continuing.  So universal coverage is an essential.  It is
not there in that one.

     Another one is that they don't have the benefits
defined.  That is done later by some national board.  And it's
important that you know what you're getting before you vote on it
and what kind of coverage you're going to have.

     I would say the third problem with it is the cap that's put
on the plan, the tax cap.  And what you would see is a lot of the
major companies that have full coverage would be cutting back
insofar as that coverage, and I think that is a serious flaw in
the system.

     Q Dr. Tyson, you said that you're not prepared to
offer specific estimates on the employment impact, but you know
there are short-term impact of net jobs created of 400,000?

CHAIR TYSON:  That was in health care.

     Q Right.  Can you offer how you got to that math?
And how useful is that number if the Clinton plan really isn't
phased in by '96, in any real meaningful way?

     CHAIR TYSON:  The number was purely within one sector of
the economy, so it's not an economy-wide number; I want to make
that clear.  That was one thing that these standard models have
not taken into account, is what might happen to overall employment
in the health care sector.  That does assume that there is phase-
in at that time.  So if the phase-in changes, then the dynamics of
additional job creation in the health care industry are sensitive
to the timing of the phase-in.  That is exactly right.

     Q Could you walk through some numbers of how you got
to this?

     CHAIR TYSON:  That was an estimate that takes into
account a projected reduction in the insurance clerical work
associated with the administrative cost simplification, and then
also takes into account increases in other providers.

     David, what's the source -- David told me the source of
the number, but what is the source of the number?  Bureau of Labor
Statistics, right.  So this was looking at projected growth in
health sector employment -- various parts of health sector
employment done by the BLS, and then making adjustments in those
projected growth rates for health sector employment to take into
account the anticipated reduction in administrative and clerical
on the one hand, and the anticipated increase in home health care
nurses and other practitioners in the health care industry.

     So it wasn't a precise modeling exercise in the sense of
sort of running a series of regressions, it's looking at a set of
baseline projections, and then adjusting those baseline
projections based on what we anticipate to be the effect of
administrative savings on the one hand, and increases in provider
services on the other.

     Q On the same issue, you are saying that your
economic models can't capture many of what you think are the
benefits, the economic benefits this plan would -- why shouldn't a
listener or reader take that as evidence of what many say as their
greatest fear about this plan, which is that it is just so large,
it is so large economically, that things are going to pop out
somewhere?  Is that the reason why your model can't take into
account the --

     CHAIR TYSON:  The reason why the models -- models are
not designed to do what they need to do.  That is, let me just
give you a contrast.  We did -- the CEA did, and the
administration did make a prediction of the employment effects of
the economic stimulus package, for example.  Now, how did we get
that?  There are models out there that have been estimated over
several decades whose sole purpose is to say if you change a tax
policy or you change a government expenditure line, what happens
to GDP and what happens to employment?  There are economy-wide
models.  You don't have to know anything about different kinds of
firms, small and large, and which firms are getting an increase
and which firms are getting a decrease.  You don't have to go down
into firm level differences and firm level differences in
response.

     So it was simple to do that exercise.  There isn't any
model out there which allows you to distinguish, to make the kind
-- the list of distinctions that I have made here today, which is
to take into account welfare lock and job lock and changes within
the health industry and changes for those firms who get cost
reductions.  We have to sort of make a set of assumptions on how
they respond.  And for those firms who get a cost increase, we
have to make assumptions about how they will respond.  And,
ultimately, I think the exercise becomes one of using incompletely
specified models and sets of assumptions to generate numbers.  And
my sense is --

     Q Can I follow up on that?

     CHAIR TYSON:  Sure.

     Q If you have this problem with employment, with
models of employment.  You also have it with models of insurance
behavior, retirement behavior and various other things that the
plan makes specific claims about.  Should we have as many doubts
about those numbers -- numbers, for example, that Mr. Magaziner --

     CHAIR TYSON:  All right, here's the thing.  Each of --
for example, on the issue of utilization, for example, there is a
very good study, the Rand study, which is widely used as a
standard to predict how people will -- how utilization rates will
respond.  It was designed specifically with that question in mind.
The question is, how does the utilization rate respond to a change
in coverage.  Okay?  So there are studies out there which think
about what affects retirement behavior.  Okay?  They are designed
specifically to ask that question.  So I think you can get much
more specific, precise answers with narrowly specified questions.

     When you get to the economy-wide impact on employment of a
plan which has a variety of offsetting effects, then you don't
have the model that's precisely designed to answer that question.
It's really a difference.  We have models that address precisely
the kinds of questions we needed to address to come up with
specific estimates.

     Q What is the small effect that you're talking about.
A small loss, at what year, 2000?

     CHAIR TYSON:  You can generate --

     Q A small change?

     CHAIR TYSON:  You can generate both kinds of numbers.
Notice -- let's just give you an example -- which is why I think
to give a number is to sort of provide false precision.  The
numbers are speculative, because you could, for example, make an
assumption about how small firms will -- firms might respond to an
increase in their costs by adjusting downward their wages and not
changing their employment at all.  And the firms who benefit could
respond by increasing employment and not giving any wage benefit.
That kind of run will generate a net positive number.  It will be
small, but you get a net positive.  You could do -- you could play
the assumptions another way.  So our position is the net effect is
small, the effects that tend to increase employment strengthen
over time and the effects that tend to decrease employment weaken
over time.

Q What's the range that the models show?

     Q What is small?

     Q What's the range?  If you have parameters, what are
they?

     CHAIR TYSON:  Well, I can suggest to you that the range
is probably less than half a percentage point of employment.

     Q Up or down?

     CHAIR TYSON:  Up or down.  But I'll tell you that I do
not feel that it is appropriate to speculate on the number
because, as I've just pointed out, any number is speculative and I
can generate a number for you on either side.

     Q No one has said anything yet about inflation.  Can
you talk a little bit about those percents?

     MR. RUBIN:  Laura, I think, would be the appropriate
person to do that.  But let me make one comment if I could on the
comments that Laura was just making.  She was referring to the
models and how economists approach this.  I'll go back to the
pragmatic comment I made at the beginning of this.  And I do think
if you've been in this world for a while, when you're dealing with
economists, you're dealing with business people and you have to
make judgments of what's going to happen.  You sort of weigh the
both.  I think if you ask most people, almost all people who run
big companies what they think, I think they'd give you an answer
that's based more in viscera than it is on anything that an
economist can document.  And the viscera is that escalating health
care costs have been an enormous problem with respect to
international competitiveness and they simply have got to be
gotten under control if we're going to be competitive in the
international world and have the exports we want to have.

CHAIR TYSON:  What was the question?

     MR. RUBIN:  It was some question related to inflation.

     Q Can you tell us a little bit about whether this
plan and , for example, pumping up the health care sector
temporarily will have inflation effects on the rest of the
economy?

     CHAIR TYSON:  The problem with that question is that in
a way it's another side of the same question, because firms can do
a number of things when faced with a change in their health care
costs.  They could try to -- firms that have higher costs could
try to increase their prices.  Firms that have lower costs might
very well decrease their price.  They might not, they might
increase their wages, instead.  So it is very hard, again, at the
economy-wide level because there are such differences across firms
to really predict what the effect on the overall -- the economy-
wide effect would be.  It's the same question sort of looked at a
little differently.

     Q Have you got a range that you can give us, a range
on the inflation, upper or lower, as you've done generally for the
employment numbers?

     CHAIR TYSON:  Well, I'm sure we could.  But my sense is
that, again, I feel that you should use numbers when you believe
the numbers can be defended with precision.  But we're in a
situation here where we don't have the modeling capabilities --
not just us, incidentally, nobody has the modeling capability to
really get a precise estimate of these effects.  People will try
to estimate them, but I think that the correct position is that
there are no precise numbers on this, but that there is every
reason to believe that the net effect will be very small, because
you have a lot of factors working in one direction, offsetting
some factors working in another direction.

     Q Given the imprecision, what effect does this have
on your deficit reduction prediction of $91 billion?  How firm is
that number as far as the result of health care reducing the
deficit --

     Q As well as your -- increased revenues for
Treasury.
     Q Yes.  I mean, doesn't this have a peripheral effect
on all these so-called firm numbers that are in your plan?

     SECRETARY BENTSEN:  Well, once again, you have the same
problem that she's been discussing, is not having a precise number
at this point.  And what we're doing, we're scrubbing the numbers.
We've gone so far as even to hire outside actuaries, outside
estimators to try to be sure that we have total objectivity in it,
and to be certain that these numbers aren't tilted, that they're
the best numbers we can come up with.  We've got them working on
through the night in Treasury, and I know OMB does, as we try to
bring these about.  But I can't give you a precise number at this
point.

     Q Mr. Secretary, how do you end up with, for example,
revenue numbers that -- increased revenue numbers that require the
economy to behave in certain ways?  If you can't predict the
economy, how are you going to predict these revenue numbers, or
the deficit number?

     SECRETARY BENTSEN:  I didn't say we couldn't predict
them.  I said we're still working refining them.  When you take
one facet of it, you can do it with laser precision.  But then,
when you get to the interaction of those things, that's much more
difficult, and that's what we're trying to resolve.

     CHAIR TYSON:  Can I say something about this?  I really
think that -- think about the situation here.  Plus or minus half
a percentage point of total employment is basically in a rounding
error
--   it can be a rounding error for a monthly employment number.
That's the size we're talking about here -- a rounding error for a
monthly employment number.  We can get the economy-wide effects on
tax revenues, and we can get the economy-wide effects associated
with subsidies with that kind of rounding error.  The main point
is, this effect is small.  It is a small net effect.  So we're
pretty confident, quite confident that we can get the economy-wide
predictions that will give us what we need to make deficit
predictions and revenue predictions.  We're talking about -- just
a rounding error in a monthly employment number.

     MR. RUBIN:  Hold on one second.  We're going to take one
more question.  The President is going to do an event in about
five minutes, and that apparently preempts us.

     Q Secretary Reich, you said early retirees or people
who want to retire are now holding back from retiring because of
the lack of health care.  If universal health care coverage is
available, how many more people do you think would be encouraged
to retire, and what kind of savings are we talking for
corporations that now provide health care benefits for early
retirees and regular retirees?

     SECRETARY REICH:  The range we are dealing with is
350,000 to 600,000.  But, again, I want to emphasize that we are
scrubbing those numbers and working on those numbers at this very
time.  And those numbers, like all the other numbers, are
subjected to and should be subjected and will be subjected to not
only a great deal of review, but depend on the interaction of many
of the other factors that we have talked about before.

     Q When you say you're scrubbing the numbers, how much
could they go up or down?

     SECRETARY REICH:  At this point, I don't know.  I think
that that's the rough magnitude.  But we are reviewing the numbers
at this very moment.

     Q    to 600,000 people.  What about the cost savings
to companies?

     SECRETARY REICH:  And again, at this point, we don't
have a firm number.  We're reviewing those.

     THE PRESS:  Thank you.

     END2:19 P.M. EDT