Remarks by Steve Forbes
                                    National Managed Health Care
                                    Congress Atlanta, Georgia 

                                    "Time For A Health Care Declaration Of
                                    Independence"

                                    Thank you all very much. It's a great honor to be here
                                    this morning because you and I are entering a new,
                                    information-age economy that's profoundly changing
                                    the way we live and the way we work. And no where
                                    is this more evident than in health care. 

                                    Without question, Americans have the best trained
                                    doctors and nurses, the highest quality medical
                                    schools and the most advanced life-saving
                                    technology the world has ever seen. The
                                    breakthroughs in medicine in this century have been
                                    absolutely breathtaking. But the advances in this
                                    decade alone stagger the mind. Lasers...digital
                                    imaging... incredibly vivid sonograms...neo-natal
                                    surgery...genetic mapping...wonder drugs - the likes
                                    of which our parents and grandparents could never
                                    have imagined. 

                                    Basically, we have the greatest health care
                                    professionals in the world. But the system they work
                                    in has problems that could slow or damage the
                                    incredible advances that should be coming, and
                                    could harm the delivery of health care to the
                                    American people. Medicare is going bankrupt.
                                    Medicaid is a mess. Washington has made a hash of
                                    medical savings accounts. And - with all due respect
                                    - one of the unfortunate byproducts of
                                    employer-driven managed care is that it creates a
                                    system that can become hostile to innovation. After
                                    all, innovation is initially expensive. Eventually it
                                    becomes less expensive and more accessible for
                                    everyone. But a system that's acutely
                                    cost-conscious isn't as likely to approve the use of
                                    new and initially expensive innovations, as a more
                                    patient-driven system would be. 

                                    And if all that weren't enough, now Washington is
                                    considering a so-called "Patient's Bill of Rights,"
                                    which begs the question: Why does it take an act of
                                    Congress for patients to have flexibility and choice in
                                    what doctors they see? 

                                    Of course, other than all that, the politicians have
                                    everything under control. 

                                    You see, the core problem in American health care
                                    is how we finance it, which in turn affects its delivery.
                                    As you know, an employer can buy health care with
                                    pre-tax dollars - but most individuals can't. Not
                                    surprisingly, most people get private health
                                    insurance through their employers, who, in effect,
                                    get a huge discount. The employer is in charge of
                                    the health care money, even though it is counted as
                                    a fringe benefit for the employee. 

                                    The problem arises because the patient isn't in
                                    charge. He doesn't have much, if any, control over
                                    the money that is spent on his health care, so he
                                    doesn't treat it as his own. If he saves money, he
                                    doesn't get to keep it. If he's wasteful, he doesn't get
                                    charged. Imagine if employers covered an
                                    employee's car insurance and paid for gasoline, car
                                    washes, oil changes and all kinds of other routine
                                    maintenance - as well as traditional coverage for
                                    accidents, fire and theft. Imagine how expensive
                                    such insurance would be. Well, in a sense, that's
                                    what's happening with health care. 

                                    Except that it's worse than that. Many workers who
                                    have health insurance that covers the bulk of their
                                    routine medical expenses fear that if they face a truly
                                    major illness or accident, they may be denied or be
                                    hindered from getting proper care - or, almost as
                                    frightening, find themselves financially destitute -
                                    even bankrupt - in the process of getting good care.
                                    And for those Americans who have no health
                                    insurance at all, their fears are even more intense.
                                    We have a real crisis of confidence in our health
                                    care system today. 

                                    Now think about this question for a moment: Where
                                    else in our economy do we consider growing
                                    demand a crisis? When demand rises for cars, we
                                    applaud it. When demand for housing grows, we
                                    cheer. When demand for microchips and software
                                    grows, the markets go crazy. So why is the growing
                                    demand for health care considered a crisis?
                                    Precisely because of the horrible way we finance it. 

                                    In fact, when you think about it, we don't even have
                                    real health care insurance. We have a system where
                                    employers pre-pay an estimate of next year's health
                                    care costs. So - not surprisingly - we have a system
                                    that creates incentives for insurance companies to
                                    avoid people with illnesses, or deny sick people the
                                    amount and quality coverage they may really need in
                                    order to keep costs down. Instead of shared risk -
                                    the traditional basis of insurance - we have risk
                                    avoidance. 

                                    What, then, do we do now? Well, the Administration
                                    thinks more government is the answer. But
                                    government isn't the answer; it's the problem. Who
                                    do you think created this convoluted health care
                                    financing? The federal government. Back during
                                    World War II, Washington imposed wage and price
                                    controls. But employers needed to attract good
                                    people. So, using the tax code, they created a back
                                    door fringe benefits deduction to allow employees to
                                    get their health insurance on the job. It was a way of
                                    giving people a pay raise without violating wage
                                    controls. That put us on the road to where we are
                                    today. But it didn't stop there. You know it first hand.
                                    Today, the Washington politicians get all upset about
                                    rising costs and the growing number of uninsured.
                                    So what do they do? They pile on all kinds of new
                                    rules and regulations. But these just drive up the cost
                                    of health care and increase the ranks of the
                                    uninsured. People get more upset. So the politicians
                                    pass more rules. And the vicious, counterproductive
                                    cycle goes on and on and on. That's what the
                                    Clinton-Gore health care plan was all about in '94.
                                    And that's what the so-called "Patient's Bill of Rights"
                                    is all about today. 

                                    The truth is that the real cure for what ails our health
                                    care system today is less government and more
                                    freedom. 

                                    That's why today I'm calling for a "Health Care
                                    Declaration of Independence" - an entirely new
                                    approach to health care that takes power out of the
                                    hands of the government, the "gatekeepers" and
                                    other third-party payers, and puts it back in the hands
                                    of individuals and families, where it belongs. 

                                    I believe there are some core values that ought to
                                    guide the American health care system as we go into
                                    the 21st century. 

                                    For starters, I think that all Americans should be free
                                    to choose doctors they trust, specialists they need
                                    and second opinions they want for themselves, their
                                    children, and their families. It is absolutely critical that
                                    we work together to fully restore and protect the
                                    doctor-patient relationship - because it is the heart
                                    and the soul of a truly compassionate and effective
                                    health care system. 

                                    All Americans should be free from the fear of being
                                    left behind in this information-age economy without
                                    real health security. Today, 43 million Americans
                                    have no coverage. That's growing by a million
                                    people every year. In California alone, 7 million
                                    people have no health insurance - that's growing by
                                    50,000 people a month. 

                                    Last Friday, Hortensia Magana, a Latino business
                                    leader, wrote an op-ed in the Los Angeles Times.
                                    She said: "If members of Congress and the growing
                                    list of presidential candidates want to meet the
                                    Latino community's most pressing need, the issue
                                    they will deal with immediately is health care." 

                                    She noted that 38% of non-elderly Latinos in
                                    California have no health insurance. "Latinos are
                                    getting the short end of the health care stick," she
                                    said. And she's right. And she's not alone. And that's
                                    not good enough. Not in America. Not as we enter
                                    the 21st century. 

                                    All Americans should be free to purchase
                                    affordable, portable, private health insurance for
                                    themselves and their families. And critically
                                    important, they should be free to buy affordable
                                    catastrophic health insurance policies that they own,
                                    that cannot be taken away from them, and that gives
                                    them real peace of mind by truly protecting them in
                                    case of a major illness or accident. No American
                                    should be forced into government-run health care
                                    programs or - and I know this isn't going to be
                                    popular here, but it needs to be said - forced into
                                    top-down, and sometimes heavy-handed managed
                                    care and HMO programs against their will. If people
                                    are happy with their HMOs, that's great. But they
                                    should have real catastrophic coverage and be free
                                    to choose from a variety of other insurance options. 

                                    Now that said, I also believe that health care
                                    providers and insurers - like you - should be free and
                                    encouraged to create a vibrant, dynamic private
                                    health insurance market that meets the needs of real
                                    customers, that responds to the dissatisfactions in
                                    the marketplace, and treats people with dignity and
                                    respect. That's how we restore confidence, improve
                                    quality, achieve more medical breakthroughs, and
                                    control costs - through the miracle of the
                                    marketplace and the healing power of competition. 

                                    There's another core value that we must make part
                                    of our health care system. I believe that every
                                    American worker has the right to know how much his
                                    or her employer is spending on their health care! 

                                    And all Americans should be free to make their own
                                    health care spending decisions, and they should be
                                    free to use Medical Savings Accounts if they want to.
                                    Again, no one should be forced to use an MSA. But
                                    they're good products. They work. And people
                                    should have access to them - and I'll talk more about
                                    that in a moment. 

                                    Now, these are some core values that can help us
                                    put patients first. The question, of course, is: How do
                                    we put these values into practice? 

                                    The first thing we need to do as we head into the
                                    21st century, is to begin moving towards a health
                                    insurance system that, number one, empowers
                                    patients and gives them the freedom to choose the
                                    coverage they need and the doctors they trust....and
                                    number two, provides real financial protection and
                                    catastrophic coverage in the event of a major illness
                                    or accident. 

                                    That's what health insurance is supposed to be for -
                                    real security if the unthinkable happens. 

                                    Now, if we're going to move towards a system where
                                    people have real catastrophic insurance for major
                                    medical bills, we should also make it easier for
                                    people to open Medical Savings Accounts to cover
                                    routine medical expenses. MSAs work like Individual
                                    Retirement Accounts. An employer, or worker - or
                                    both - can deposit money into the MSA. If the worker
                                    gets a prescription drug at a discount, that is money
                                    in her pocket. MSAs also give people the freedom to
                                    choose doctors they trust. 

                                    In 1996, Congress created an MSA pilot program.
                                    That's the good news. The bad news was they put
                                    MSAs in a regulatory straightjacket which we should
                                    now remove. 

                                    We should allow anyone to buy them - not just the
                                    self-employed and companies with fewer than 50
                                    employees, like federal law currently demands. We
                                    should stop Washington from imposing
                                    artificially-high deductibles of between $3,000 and
                                    $4,500 for average, working families. That's pricing
                                    people out of the market. Let the markets set the
                                    deductibles so people can really afford these
                                    policies. And let's let contributions to MSAs equal
                                    100% of the deductible. And let's remove the cap on
                                    the number of MSAs that can be sold. Today,
                                    Washington limits total tax-free MSAs to a
                                    ridiculously low 750,000 policies. But that's only
                                    discouraging many insurance companies from truly
                                    developing this important market. And we've got to
                                    change that. 

                                    Right now, there is growing bipartisan Congressional
                                    support - and at least 8 different bills - to expand
                                    access to MSAs and to repeal their regulatory
                                    limitations. We should move aggressively on this
                                    front. 

                                    But you know, what's really amazing about MSAs is
                                    that they're helping people most in need of real
                                    health security even though Washington has created
                                    this regulatory straightjacket. According to the
                                    Clinton-Gore Treasury Department, one-third of all
                                    new MSA policyholders are people who were
                                    previously uninsured. And according to Golden Rule
                                    Insurance - the largest provider of MSAs in the
                                    country - three-quarters of new MSA buyers are
                                    working families...77% are self-employed...10% are
                                    single parents. These are the people we want to
                                    help. And MSAs are helping us get the job done. 

                                    One of the reasons I'm such a big believer in putting
                                    patients back in charge of their own health care
                                    spending decisions is my experience as a CEO.
                                    When I became CEO of FORBES magazine in
                                    1990, we were experiencing double-digit annual
                                    health premium increases. It was unsustainable. The
                                    question was obvious: How do we get our people to
                                    treat the health care money we spend on their behalf
                                    as if it were their own money? 

                                    The question suggested the answer. We put in a
                                    variation of Medical Savings Accounts. We give our
                                    people $1,500 a year to spend on routine health
                                    expenses. The more money they save, the more
                                    they get to keep. And it works. People now
                                    understand that being a wise shopper has a direct
                                    benefit to their own bottom line. Our expenses are
                                    no higher today per person than they were seven
                                    years ago - and none of our people have been
                                    forced into programs that restrict their choice of
                                    doctors. 

                                    There are other ways to give people more control
                                    over their own money. For example, we need to
                                    reform flexible health care spending accounts.
                                    Known as Section 125 flexible spending plans,
                                    these accounts allow workers to divert a certain
                                    amount from their paychecks to be used for medical
                                    and other expenses. The problem today is that if the
                                    money allocated for health care isn't spent by the
                                    end of the year, the employee loses it. That's crazy.
                                    It gives people the incentive to go buy medical care
                                    they don't really need at the end of the year, just so
                                    they won't lose their own money. Why not let people
                                    roll their money over at the end of the year, and build
                                    it up with tax-free interest? That makes a lot more
                                    sense, and that's where we should go. 

                                    We've also got to start giving people without health
                                    insurance the freedom to buy into affordable health
                                    care networks such as private "HealthMarts." And we
                                    need to make it easier for churches, community
                                    organizations, professional associations, unions and
                                    other groups to create their own networks of
                                    affordable insurance pools for people trying to buy
                                    their own coverage. Every American should be able
                                    to get the same advantages of group-purchasing that
                                    people with job-based coverage currently get. 

                                    And that means we've also got to dramatically
                                    reduce the regulations, mandates and price controls
                                    that are driving up the cost of health insurance and
                                    increasing the ranks of the uninsured. Let me cite
                                    you one example. Between 1990 and 1994, 16
                                    states aggressively passed laws to help uninsured
                                    people get health coverage. I'm sure this was all
                                    done with the best of motives. The problem is, it
                                    backfired. By 1996, these 16 states were seeing
                                    their uninsured populations increasing 8 times faster
                                    than the other 34 states. Why? Because all these
                                    new rules and regulations imposed new costs on
                                    health insurers. That drove insurance prices up. That
                                    caused some small business owners to drop
                                    coverage since they couldn't afford the higher
                                    premiums. It caused more self-employed people to
                                    be unable to afford coverage. And it kept many
                                    uninsured people priced out of the marketplace
                                    altogether. 

                                    This is a classic case of the unintended
                                    consequences of government regulation. And we've
                                    got to reverse this trend. We need to create a health
                                    insurance system that gives people the freedom to
                                    choose from a number of options. Americans should
                                    be free to buy basic, catastrophic coverage they can
                                    afford. They should also be free to buy more
                                    expensive and comprehensive coverage if that's
                                    what they want. But we can't keep allowing federal
                                    and state governments to impose top-down rules
                                    and regulations that end up causing more harm than
                                    good. 

                                    Now, look, I realize that all this can sound very
                                    abstract. So let me make it real. 

                                    As I said, what if every employer in America actually
                                    told their workers - in plain English, right on their pay
                                    stub, without any gobbledy-gook - precisely how
                                    much their health insurance costs? 

                                    I think that would stun most workers. Don't you think
                                    workers at, say, General Motors would like to know
                                    that their employers are spending upwards of
                                    $5,000 to $10,000 on their health insurance every
                                    year? 

                                    Healthy markets require educated consumers. And
                                    as we move towards a vibrant, dynamic, competitive
                                    health care system in the 21st century, we need to
                                    help people understand the full cost of the health
                                    care they are using. 

                                    And if we make the reforms that we've discussed
                                    here today, I believe that we'll begin to see the cost
                                    of health coverage come down dramatically - and,
                                    access to affordable health coverage will expand
                                    dramatically. That's where we want to go. Because
                                    health insurance that costs less not only helps
                                    people who already have job-based insurance, it will
                                    also truly help those who don't have any health
                                    insurance at all. 

                                    In fact, I think we can reduce the number of
                                    uninsured Americans by one-third to one-half by
                                    removing the regulatory straitjacket on the health
                                    care industry and by creating a truly dynamic and
                                    competitive market that allows people to own their
                                    own health insurance that they can take with them,
                                    even if they move, change jobs, or start their own
                                    businesses. That would be a huge leap forward. And
                                    then we could begin looking at those who remain
                                    uninsured. Are they young - and feeling like they'll
                                    live forever - and therefore unlikely to buy insurance
                                    no matter how inexpensive it is? Or are they
                                    chronically uninsured and in real need of a social
                                    safety net? It will be much easier to answer these
                                    questions when we've already started to make some
                                    serious progress. 

                                    Which brings me, finally, to Medicare and Medicaid.
                                    And let me be crystal clear: It is absolutely
                                    imperative that we rescue these two programs
                                    because the people who depend upon them are our
                                    parents and grandparents, in the case of Medicare,
                                    or those with limited financial means, in the case of
                                    Medicaid. 

                                    Today we have about 40 million Americans on
                                    Medicare. We're spending about $6,000 a year on
                                    each beneficiary. The system is in serious trouble.
                                    The lives of real Americans are hanging in the
                                    balance. Yet this Administration is AWOL on the
                                    whole issue of reforming Medicare. They don't want
                                    to deal with it. They don't have any solutions. They
                                    just want play election year political games with the
                                    health security of the elderly. They want to scare
                                    them. I think that's wrong. 

                                    I'm going to strengthen Medicare by taking money
                                    and power and control out of the hands of the
                                    government bureaucrats and putting it into the hands
                                    of beneficiaries, where it belongs. Seniors should
                                    have access to a wide variety of health care options,
                                    just like government workers do in the Federal
                                    Employees Health Benefits Program. 

                                    One option should be Medicare MSAs. And that
                                    means getting rid of the cap which right now permits
                                    only 390,000 policies. That's crazy. Every senior
                                    should be free to choose a Medicare MSA -
                                    because they work. They provide real catastrophic
                                    insurance. Who, then, would need to buy Medigap
                                    insurance - which 70% of all Medicare beneficiaries
                                    now buy, and which costs them about $1,200 a
                                    year? And, of course, Medicare MSAs give seniors
                                    the freedom to choose their own doctors and
                                    hospitals. And the money can be used for
                                    prescription drugs and other expenses not covered
                                    by traditional Medicare. 

                                    We've also got to repeal Medicare Section 4507 - a
                                    nasty provision slipped into the 1997 budget deal
                                    which effectively prohibits seniors from privately
                                    contracting with health care providers outside the
                                    government-run system. For heaven's sake, even in
                                    Britain - the mother of socialized medicine - people
                                    can opt out. Why not in America? 

                                    The bottom line is: We absolutely must not leave our
                                    parents and grandparents trapped in a system of
                                    socialized medicine while the rest of us work to
                                    improve our health care...and expand our
                                    choices...and increase our freedom. That's not
                                    America. And that's not the way we're going to do
                                    business in a Forbes Administration. 

                                    The same is true with Medicaid. Do you realize that
                                    today we have about 33 million Americans on
                                    Medicaid? We spend about $4,000 a year on each
                                    recipient. And what do they get for that money?
                                    They're trapped in a demeaning, highly bureaucratic,
                                    and essentially socialized medical system. Is that the
                                    best we can do? I don't think so. 

                                    How, then, do we empower people on Medicaid?
                                    How can we give them the freedom to shop for real
                                    private health insurance from a variety of options,
                                    including catastrophic coverage and MSAs, or
                                    buying into networks like the Federal Employees
                                    Health Benefits Program and "HealthMarts"? There
                                    has been some progress here. We're seeing states
                                    use waivers to allow Medicaid recipients to use
                                    HMOs and managed care programs. But we really
                                    need to keep thinking about how to give people
                                    more freedom and more incentives to shop wisely
                                    for their own health care and practice preventive
                                    medicine. 

                                    One idea we might want to look at is how to convert
                                    the money that federal and state governments spend
                                    on each Medicaid beneficiary into individual "medical
                                    coupons" that would allow them to go into the private
                                    insurance market and buy real coverage. 

                                    Let me emphasize that there really are two roads we
                                    can take as we face these issues. The
                                    Administration wants us to go down the road to
                                    health care completely run by the government, where
                                    bureaucrats micromanage every facet of the
                                    doctor-patient relationship, and taxpayers foot every
                                    bill. The problem is that, as Hayek observed, that's
                                    the road to serfdom, not progress. 

                                    The alternative is the road to freedom - the road to a
                                    vibrant, dynamic, competitive health care system that
                                    gives people real choices, real control and real
                                    health security. We need a system where a mother
                                    knows she is free to choose a doctor she trusts,
                                    specialists she needs, and second opinions she
                                    wants for herself, her husband and her children.
                                    Positive change must be driven by consumers and
                                    the marketplace, not by the Washington politicians.
                                    People's physical health should not come at the
                                    expense of their financial health. 

                                    That's why today I'm calling for a "Health Care
                                    Declaration of Independence." The health security
                                    and freedom of the American people is one of my
                                    highest priorities. I don't believe in business as usual
                                    - and I don't believe in politics as usual. I believe in
                                    taking money and power and control away from "they
                                    the government," and putting it back into the hands
                                    of "we the people." 

                                    Because that's what freedom is all about. 

                                    Thank you all very, very much.


