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Make or Break Month for Health Care Reform; Why Democrats and Republicans Can't Seem to Get Along on Health Care or Anything Else; You Might Be Stuck Paying Higher Drug Prices at the Pharmacy
Aired August 23, 2009 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, CNN HOST: Your health care: what changes, what doesn't? Who benefits and who pays? The cost of reform and the cost of doing nothing. No noise, just answers.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: And how much is it going to cost my kids ...
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ROMANS: Plus, liberals appalled by a deal between the White House and the drug companies. A former member of President Clinton's cabinet tells us why.
Get ready, it's time to talk YOUR MONEY.
Welcome to YOUR MONEY. I'm Christine Romans. Ali Velshi is off this week.
It's make or break month for health care reform. What happens will affect virtually every American, there are thousands of pages of legislation, competing proposals and nothing is set in stone.
Let's bring in our CNN senior political analyst David Gergen and Andrew Rubin he is the host of "Sirius XM, Doctor Radio. David lets start with you. You say the odds now of failure are rising a little bit every day. Why?
DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Well, Christine, these last few weeks have been cruel for health care reform, because we've seen a definite falling off, a fading of some support for President Obama's health care reform and a growing resistance expressed in these town hall meetings, and I think it's changing the political mind-set, the psychology of Congress.
It's very clear that Republicans are going to be much more resistant to a big bipartisan deal than only four weeks ago. It's going to be left up to the Democrats increasingly, but among the Democrats there's a real falling out now that's going on over important elements of the health care plan.
ROMANS: Most notably, the public option which was, we thought, a hallmark of this whole thing. Right? A week now of this controversy of will there, won't they and how crucial and critical is the public option where does that stand? GERGEN: We've reached a point now where moderates and liberals are getting so worked up over this, that it may be very hard to find a solution. In the House of Representatives, there is a very large liberal block that's saying, if you don't put the public option in the plan, we're voting against it. We're going to vote against health care reform.
And over in the Senate side, Democrats are saying, if you do put a public option in the health care reform plan, it will fail in the Senate. So that's -- that's the makings of a failure, and the president, when they come back from vacation, I think is going to have to haul Democrats in, sit them down and be forceful working out a deal that everybody can work with, otherwise he does risk failure.
ROMANS: The politics of have been so critical in what David is talking about, here is the politics. Meanwhile, on the street, around the country, people are trying to figure out individually what this reform that's not even written yet would mean to them.
Listen to William from Baltimore.
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WILLIAM: I'm a veteran and I'm also a retired federal civilian employee. So I have access to two health care systems. What I really want to know is how any proposed health care legislation may affect or impact federal employee retirees?
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ROMANS: That was a caller this week on a radio show here at CNN that I hosted for Ali Velshi, and he wants to know what this means. We hear over and over again specifically this issue; there are 1.84 million federal retirees. What happens to them?
ANDREW RUBIN, NYU LANGONE MEDICAL CENTER: Well first everybody wants to know what it means to them. It is hard to get an answer. On this one it is pretty straight forward. On the V.A. side, Veterans Administration side, there was some confusion in the beginning. They quickly came out and said there is going to be no changes to the veteran's benefits plan.
On the federal employee side it's both retirees and federal employees, listen the federal government's like any other employer. So I don't think you're going to see any changes, and my favorite expression, the devil's going to be in the details. But certainly the federal government has the ability to change the plan design once, whatever legislation comes out. Although I see the rest of the country migrating more towards the federal plan as opposed to the other direction.
ROMANS: So you host a radio show, too and you have been hearing a lot from callers who want to know what's in it for them and what's going to happen for them. Some of these questions we simply can't answer right now. But what is the number one thing you're hearing from people? RUBIN: The number one question, unquickically, is if I like my insurance now, what does it mean for me in the future? Can I keep my benefits? The answer is, maybe. In the short term, if you work for a large employer you'll be able to keep your benefits as they are. Assume your employer wants to provide the same benefits packages.
However, the legislation is written with time limits and after a certain amount of time, if your employer's plan does not meet the criteria that is needed for this whatever benefit package the federal government puts together, the plan becomes disqualified and people's benefits will change.
ROMANS: I was talking to health economist who has been trying to find out who has the most to gain, who has the least to gain. People who have preexisting conditions today, people who don't have insurance, are they the early gainers. People, who have their own health insurance through either a company, could see co-pays vary and change and generally health economists told me that people who buy their own could see costs go down. Is that in a nut shell, what the broad brush strokes are right now? Or are you going to tell me well Christine maybe?
RUBIN: I'm going to tell you maybe. It really depends on what legislation finally comes out and whether there's a governmental plan or if there is not a governmental plan and what's designed into these packages. What I can tell you is we all have a lot at stake in this. The largest percentages of the uninsured are actually young Americans. They have a huge piece at stake and yet we're not hearing much from them and they're actually the ones who are going to pay for a big chunk of this.
ROMANS: You know, David let me ash you. There are a lot of people, when you hear people talking and asking questions about health care reform, who are afraid about what they're going to have to give up and who they're going to be supporting. The midst about what is in these bills, one is illegal immigrants will be granted insurance coverage paid for by taxpayers. What's the truth?
GERGEN: Well there are a number of that; one of them is that illegal immigrants will be covered by insurance. The president has given flat out promises that illegal immigrants will not be covered by this insurance. There is a, another myth which I think is about abortion, that the government is going to be paying for a lot of abortions.
Christine, as you know, there's more confusion over that issue as to where this is ultimately going to come out. So third myth is that government is that the government is going to take over health care in this country. I think it's way too early to say that the government's going to take over. I don't think that's in this bill as all. Are we in a trend in that direction? That is a more interesting debate.
And finally, there's a myth, and I think this is a myth, that this bill is somehow going to lead to euthanasia, that there's going to be a death panel, so to speak, tell an old person when or if we're going to pull the plug on grandma, to use the phrase that is out there. And I think everything about this bill says we're not going there. That's not what this bill is about.
That, in fact, all this is is about end of life counseling. And that's being dropped. I do think the day may be coming when there's going to be a lot more talk in the culture about how long one should live at the end of life and whether one really wants to be in a vegetative state and voluntarily give that up in a living will, which a lot of people already do.
ROMANS: Yes but when you have politics and fear and uncertainty, then obviously all of these things become very charged and that's how these myths happen and real fear spreads when you are talking about such an epic undertaking as health care reform.
David Gergen, CNN political analyst thank you so much. Also Andrew Rubin, vice president of Political Affairs NYU Medical Center, also the host of "Sirius XM Dr. Radio." Thank you so much both of you. See you again soon because we will have more to talk about. This is frankly only the beginning. Getting you the information you need doesn't end when this show is over. You can head to CNN.com/healthcare to answer your questions, fact checks, myth busters and more.
So much for a new era in Washington. We will examine why Republican and Democrats just can't seem to get along on health care or frankly anything else for that matter it seems.
Then a former member of President Clinton's cabinet says an alliance between the White House and big pharma means you're going to be stuck paying higher drug prices.
ROMANS: All right. It is time for the ticker. Every week we go through the headlines so you don't have to. We invited some opinionated friends over to give us their take on the news of the week. Joining us today, Stephen Moore, editorial writer for "Wall Street Journal" and Stephen Leeb, author of "Game over:" And my friend Pat Kernan anchor of "New York 1 News."
So the Obama administration has threatened to push through a health care reform bill without Republican backing. Why can't Democrats and Republicans see eye to eye on this issue or for any other issue for that matter? Stephen Leeb, can they get a bipartisan bill through?
STEPHEN LEEB, AUTHOR, "GAME OVER:" Bipartisan, no. No way in the world. I mean they couldn't get a bipartisan stimulus bill. One of the big failures of this administration has been its failure to bring Republicans and Democrats even remotely together. I mean, this country has become utterly fractured along political lines. If they're going to pass a bill it's going to have to be totally partisan.
ROMANS: Stephen Moore I hear more about the politics behind this bill than the policies sometimes behind this bill. Because the politic are just so darn, I don't know, interesting or horrifying, I can't decide, but moving very quickly at least. STEPHEN MOORE, EDITORIAL WRITER, "WALL STREET JOURNAL:" Well, I think Republicans see the Democrats just, you know, eating each other on this issue right now. They're having a good time watching that, but I agree with Steve, that this is -- this is, if you look at the big issues in America, we made seismic changes.
Things like Social Security in the 1930s, welfare reform in the 1990s those have been done on a broad bipartisan basis. It's hard for me, Christine, to see how this works if only Democrats think they can do this totally on their own, because even if they win, which I don't think they will, there's no kind of broad public support for the new program.
PAT KERNAN, ANCHOR, "NY1NEWS:" And then answer the question what is a new public program and where will they go with this, when you have the insurers on one side, when you have people looking at public systems on the other side. There's no consensus over where we should get to.
LEEB: Christine I just want to add one thing. Why couldn't this administration have put in the bill something everybody could agree with?
ROMANS: You don't see it in the bill?
LEEB: No. This is it. This say the of work ...
ROMANS: Wait. It's on page 863, Stephen back in.
LEEB: I mean the only people that are going to vote for this are Republican and Democratic lawyers. That's who's enriched by this. Listen; go back to the '60s. I don't remember when, because maybe I'm not that old even though I look it. Richard Nixon declared war on cancer. Everybody thought it was a great idea. Why don't we declare war on diabetes? 20 million Americans could be helped by winning this war, and this is a war that's winnable!
ROMANS: Prevention is part of this. I want to let people know, I'm just taking, this is a first here. Just the first --
KERNAN: How many pages have you printed, Christine?
ROMANS: I know. Now the conservation people will be on my case. This is just the first; I don't even know how much how many this is, 301. This is the -- called HR-3200, this big pile here. We've been hearing a lot about this. This is actually a consultation on some house members on different committees and there is this senate version, it's much, much shorter. Equally ...
LEEB: Well so far much shorter.
ROMANS: None of these have -- this is all work, Stephen Moore, I mean I think this is really for people to understand, all of this is still changing. All of this is still changing. Isn't it?
MOORE: Yes. The reason the Senate bill is so much shorter, Christine, there is all elements of the bill they haven't filled in. So they just left them blank. But I mean, Steve, I finally agree with you so much today. But you're right. This is a lawyer employment act and I've actually read that bill. Not the whole thing but I read a lot of it, and I'm a pretty intelligent person. I have a master's degree and I couldn't understand half the language they were talking about.
ROMANS: Our Sanja Gupta read all of the 3,200 and we were sort of joking saying, gosh, you have three kids, where do you get the time? I have an ability to read a lot of information, and -- can't do it.
LEEB: Christine, I keep -- I'm obsessed at this point. Why can't they find one aspect of this that everyone can agree with? Just one little point? And then maybe make that the focus of the bill, and, again, I keep coming back to this issue. There's 20 million, 30 million Americans that suffer from diabetes. There are drugs out there they are called glp-1 to devote $3 or $4 billion to research to get this drug's approval.
ROMANS: There are not specific drugs or conditions named in here. It is kind of like broad principles. Let's move on. Let's move on to the next idea. Just sort of a general conversation. What we have been hearing is health care reform is so critical to actually once the economy starts to recovery we want to have an economy that could continue to grow in health care reform.
Look at this number here. Not sure if any of you are fluent in Latin, but here is my roman number for our next story. That number is 38, 38 percent. That is the percentage of employers expected to rehire workers they have laid off. I think the angel of darkness for two years folks you are going to have to let me say something that's not negative. GM, one of those companies that will be rehiring workers, they are asking for the 1300 employees to come back to work mostly due to increased production in sales from the cash for clunkers.
KERNAN: Because we gave people $3 billion to buy cars.
ROMANS: And signs the economy is bottoming, Pat, or ...
KERNAN: What's the surprise about that? Throw all this money at people to come and buy cars. They come and buy cars for three weeks.
ROMANS: Let's listen to what Robert Gibbs said. Robert Gibbs does not want to take any kind of pessimism. He is the White House spokesman, doesn't want to take much pessimism about cash for clunkers. Listen to what he says.
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ROBERT GIBBS, WHITE HOUSE SPOKESMAN: This has been a very successful program. OK. Dealers have sold cars like they haven't sold them in quite some time. Manufacturer are producing cars like they haven't in quite some time, and workers have been hired again to make those cars to replace that inventory like they haven't in quite some time. This is, without a doubt, an unqualified success.
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ROMANS: Pat Kernan, what's wrong with that? This is unqualified success?
KERNAN: Because we paid them to take the cars!
LEEB: Christine two days ago I was really kind of down. Didn't get enough sleep. I drank about eight or nine cups of coffee. It was great. The next day totally dehydrated and had to sleep for three or four days. We don't know the after effects of this. All we know is consumers have piled up a ton of debt; they are not shopping at other stores. Retail sales x autos are way, way down. It's way too soon to say this is anything, I could be a total failure. We don't know what it is at this point.
MOORE: Christine, I got to tell you for full disclosure, I'm one of those Americans who took advantage of this program. I loved it. The government gave me $3,000 for a car that was worth $600. The lesson here guys is Americans love free money. Right? This was a free money program. I just think the problem is you don't get rich as a country by passing out free money and that's what we've done in this program.
ROMANS: Is it Stephen from your point of view; is it a sugar rush and not necessarily a sustained economic growth through the fall? Could this take money away from other retail spending in your view?
MOORE: I think the problem with the program, is that yeah, we've seen a big surge in auto sales. The real question, what's going to happen from three months and six months from now? All people are doing is they are just moving forward the transactions they would have made three to six months ago so I think you might see nosedive in those sales in a few months.
ROMANS: All right. Moving on to the next head line, we can barely believe this story from "USA Today." A government paid funeral services, basically, because a spiking number of people, who simply cannot pay, do not have the money to pay for funerals themselves.
So instead, counties and states are using public money, your money to cremate or bury people who are too poor to pay for private services truly a sign of the times when people can't afford to pay for their own funerals anymore? We are talking about a bottoming in the economy hopefully looking towards a recovery and then we are still looking to things like this.
KERNAN: Most have done this. They've said they've seen a notable increase 10 percent in some places, 20 percent in others, and doubly in other places. But that is what they said is that there are people who are just saying, I've haven't got seven grand or whatever the average funeral cost at.
ROMANS: Sign of the times?
LEEB: Yes, it is totally a sign of the times, Christine. Totally. Yeah. It's horrible. There's nothing else to say to this, except that times are really, really lousy. ROMANS: All right. Last words Stephen Moore.
MOORE: What you can say about it is the economy is so bad you can't even afford to die.
ROMANS: All right. I love it when you end with a smile on your face. Beautiful.
All right. Gentlemen stick with us because coming up next, is it fair to make parents pay for a football program in high school. How about $350 to be a cheerleader. Paying to be a cheerleader, strapped schools taking desperate measures.
ROMANS: Mom and dad, get out your checkbooks $50 for Junior to sing in the choir, another $50 to play in the band, $100 to $300 to play a sport or to be a cheerleader, depending on where you live, rather than cut sports and clubs public schools are getting creative to save their extra curricular activities.
ROMANS (voice over): Head to head competition for a spot on the team. No guts no glory. Sure, but no cash, no football? Each of these kids pays $100 to pay; budget cuts left this New Jersey school district no choice.
UNIDENTIFIED MALE: Set!
ROMANS: Jobs were cut. Some class sizes got bigger. Now they've turned to new fees to keep sports and extracurricular activities alive. $100 for a student in the high school, $75 in the middle school. There is a $200 cap per family.
JANICE DIME, SUPERINTENDENT: You look at a variety of possibilities including the cutting of middle school programs, cutting of some coaches and ultimately after listening to so many parents, they were in favor of the other option, which was to institute the activity fee.
ROMANS: A growing number of schools in 33 states are doing the same, after cutting to the bone.
BOB GARDNER, NATL. FED. OF STATE HIGH SCHOOL ASSN: We're trying to find ways to eliminate costs where they can, but with the difficulty with the economy, we're seeing the amount of dollars that parents are being asked to pay to support programs increasing.
ROMANS: Parents have mixed feelings.
HENRY ZIMMERMAN, PARENT: At first, I felt a little funny about it, but then I thought about it. If the sport is going to die, I'd rather pay and keep the sport alive.
ROMANS: The superintendent of West Essex say many parents feel the same way and participation hasn't been hurt, but she sees the strain on families. Essex County has the second highest property taxes in the country.
DIME: One of the things that parents raised is there's a lot of fund-raising that also goes on with respect to musical programs or athletic programs. So you know, the activity fee was on top of all the other contributions that parents make all the time. But they wanted to see all the programs stay.
ROMANS: And most schools waived the fee for kids who can't afford it. Now you are standing off on this pay to play, here is what some of you told us on facebook and twitter. It's a fact that children who are involved in these activities get better grades. Not only are they better students they're healthier and in the long run they will contribute to society more and be less of a burden on Joe taxpayer.
Debbie said, "We actually had to pay for parking and they've taken away our linen services for the school. Towels are no longer provided for the students for gym or sports. The family has to send the towels home and send the towels and pray the kids bring them home."
Jude from New Jersey says, "Pay to play is fair. As a New Jersey homeowner, the bulk of my taxes are for schools. New Jersey taxes are among the highest in the nation. People without children should be given a break and parents should provide for the needs and wants of their children."
Ticked off at how the recession is hurting your school, drop us a line with your questions, your concerns we are at YOURMONEY@CNN.com or you can send me a tweet at Christine Romans.
President Obama's long awaited credit card crackdown takes effect at long last. What are your new rights? You'll find out next.
ROMANS: Walking through the big news of the week. Let's get back to our ticker with Stephen Moore, editorial writer for the "Wall Street Journal," and Stephen Leeb, author of "Gamer Over" and Pat Kernan, anchor of NY1 News.
OK, your new credit card, it is going to look better. You are going to have some more rights and they are taking effect this week. You are going to have the right to reject rate increases; you are going to have five years to repay your balance at the current rate. You are going to have 45 days notice before rate increases now and your bills are going to be mailed 21 days before the due date.
We were told this is all this big new your new rights. But it might be harder to get a credit card. You are already seeing your interest rates go up and the real sweeping changes don't go into effect until February. Is it good for American's what is happening Pat? What is happening with credit cards? KERNAN: Do you read that stuff? Would you understand what was changing?
ROMANS: I already got the thing in the mail this week. And I already had to look at it. I found out that ...
KERNAN: Did you cross reference it with the previous agreement to determine what the changes were.
ROMANS: It was very clear. But basically what it said is if I'm over drawn past my limit they are going to charge me like 20 percent of my APR.
KERNAN: Are you rejecting that and sticking with the old rules?
ROMANS: I mean, I don't know. I don't know what to do.
LEEB: I mean -- this is a big change, Christine, it's that if you reject everything, you can pay back in five years, but before, if were you going to pay back, the amount you had to put down was, could be almost anything. Now it's set. It's a fixed number and it's not, hopefully not as honorous (ph) as it once was.
ROMANS: Stephen be careful what you wish for because we were clamoring for this and we've seen interest rates rise this year, we know they're closing people's accounts, we know that some of the rewards programs are going away or they are going to be strictly limited. We wanted a bill of rights. We got our rights but at what cost?
MOORE: Yeah. I think consumer finance 101, lesson here Christine is you don't want debt on your credit card. That is the way the credit card companies make their money. Now I happen to think that the huge explosion of the availability of credit cards over the last 25 years has been something that has been very pro-consumer.
It helped low income people be able to buy things. I don't have a big problem with this bill. I'm one who defends industry, but I think most of the changes here are commonsensical and I think it will make it easier for people to understand the terms of their credit card.
LEEB: I think the big change, Christine, comes in February. Where they say, if you're not 60 days in arrears, you cannot raise the interest rates. What happens if one is right and inflation starts to rise? That could really hurt the bank, and that could really benefit consumers, because it's going to pay them to be a little bit late, because they're going to take advantage of inflation.
ROMANS: Listen, speaking of being late, an increasing number of homeowners failing to pay their property taxes on time. No surprise here. It's tough. According to a report in the "New York Times" local governments, this is what is surprising. Local governments turning to private collectors to track down the money.
That means quick cash for the county and they've close at gap from the people who aren't paying their taxes on time, but it means higher bills for the delinquent homeowners because the private companies then tack on these huge service fees and interest rates. Are local governments actually kind of making it worse? They have no other choice?
KERNAN: It makes some sense if everything is working as it should because the local government gets some numbers on the cents from the dollar from the debt collector and deal with the problem. The issue is when you get into so many people having trouble. Where's do you end up with here? The entire neighborhoods foreclosed? The city governments at least should use some discretion.
LEEB: I think this is a brain dead idea by the local governments. Why don't they get the banks involved? Because if these houses are foreclosed the banks lose, too. They lose their mortgage payments. Instead of turning to a third party, which is going to charge near usurious interest rates, charge someone who is motivated to see that these people pay their taxes, don't get foreclosed that would be the banks.
Why aren't the banks involved in this? Why don't we make a law that the banks have to be involved? You can't get these outside visas?
ROMANS: Stephen Moore.
MOORE: You know it is sort of like they're hiring Guido to come and collect the property taxes. I think the irony here is what we were just talking about. Credit cards charging these huge fees on overdue credit. Now they're going to charge you a huge fees to governments, the governments are for overdue on your property taxes. I think there is an injustice here.
KERNAN: And Guido's entirely removed from the situation. Quido doesn't worry about what the local unemployment rate is or the -- Guido just wants his money.
LEEB: You need a third party that is interested in seeing this work out. These tax collectors don't give a darn.
ROMANS: Let's move along. Let's move along from our friend Guido, who I don't even know who that is to Michael Vick. I do know who he is; Michael Vick is out of prison. He's back in the NFL. Vick's jersey was the top seller on the NFL Website at one point last week.
The top seller, and his new employer, the Philadelphia Eagles report that they have not lost a single corporate sponsor, despite all the controversy surrounding Vick and the worry that he's going to keep fans from buying tickets. We live in a country where if you have something that you're good at, we will give you a second or third chance. Is that what we're seeing?
KERNAN: It might take a little while for everybody to step back from the situation. Here he is, he's back, and he's got a contract. He served his time.
ROMANS: Should we be idolizing and paying millions of dollars ... LEEB: I don't think we should be idolizing, I think what you should recognize, I think we are entitled to second and third and fourth chances in this country. I think that's part of America, and if Michael Vick goes around and basically promotes the Humane Society and what they're doing and that's exactly what he's trying.
ROMANS: They didn't hire him to promote dogs and cats but they promoted him to be a really good football player.
LEEB: That is true, but on the other hand, if he served his time and learned a lesson, which we have to believe, he says he has. You give people the benefit of the doubt; this could do more damage to dog fighting, which continues to be a very, very active pastime unfortunately in this country and other parts of the world. Michael Vick could really make a dent and really improve that horrible situation. Yeah I think the Eagles, hooray for the Eagles I think they did something very brave.
ROMANS: Stephen Moore will it cost the NFL, will it cost the Eagles, will it cost anybody or we just move on from this?
MOORE: Well look we live in an era of redemption. People love redemption stories. But it all comes down to one thing Christine. Can the guy complete passes? Because if he performs on the football field I think the people of Philadelphia will be very forgiving.
ROMANS: Yes. People are forgiving in this country when somebody is successful at something and contrite, too.
KERNAN: I was just going to say if you are talking money, Michael Vick is certainly paying. His old contract was worth many times what's this one is.
ROMANS: Oh, he has a little hiatus.
MOORE: It cost him like $30 million or something like that.
ROMANS: Wow. All right. More than $100 million. My producer just got in my ear, Stephen Moore and says more than $100 million.
LEEB: Wow. That's paying a lot.
ROMANS: That is paying a lot. Unless you're talking about, Washington, that's a lot of money.
KERNAN: They should have given that money to the state so they can pay their bills.
ROMANS: Stephen Moore, Stephen Leeb and Pat Kernan, everyone, thank you very much. A lot of fun.
The big drug companies are alive with the White House for health care reform. Our next guest says, that's going to cost you big time.
(COMMERCIAL BREAK) ROMANS: On the surface it sounds like a victory for proponents of health care reform. The pharmaceutical companies are onboard working with Senate Democrats in the finance committee, even receiving praise from the White House. For an $80 billion pledge to reduce costs over are the next ten years.
Former Clinton cabinet member Robert Reich said he's appalled by the deal between the White House and the pharmaceutical industry. I asked him what an alliance between big pharm and the White House will mean for your drug costs.
ROBERT REICH, FORMER SECRETARY OF LABOR: Christine, we don't know the details of the deal. In fact, the White House has been moving a little around on whether there was a deal or what the terms were. But according to the pharmaceutical industry, there was a deal, there is a deal and a big part of the deal is that Medicare will not be allowed in the future.
Just as it hasn't been under George W. Bush, to negotiate lower drug prices using a huge bargaining leverage that it otherwise would have. This would mean if in fact this was the deal that drug prices would stay quite high and it would put a crimp in overall long-term reductions in health care spending.
ROMANS: Your column, your piece on this issue was scathing. You are very outspoken about what you see as an alliance between these two. We spoke to the pharmaceutical vice president Ken Johnson, this of course is the group that represents the drug companies and we asked him about this deal and the reports that it's going to save about $80 billion in health care costs in exchange for the government as you point out agreeing not to use purchasing power to lower drug costs.
This is what he said; he said "There is no secret agreement. We were clear with the administration from the very beginning that you can sign us up as partners in health care reform but we will not support price controls because of its impact on research and development. When the Senate and Finance Committee releases details the plan people will see at least $30 billion in savings for seniors as a result of fixing the doughnut hole and approximately $50 billion as a mix of fees and rebates to expand health coverage for millions of Americans."
How do you respond to their response, I guess?
REICH: Well I would say that the $80 billion they're promises to save is very small in comparison with all of the money that we otherwise would save if Medicare and Medicaid could negotiate lower drug prices. Remember, the baby boomers are approaching the time when they will be eligible for Medicare.
And the actual population of Medicare and Medicaid eligibles and not only because they're baby boomers but also because of this new health care plan, should it go through, is going to be very, very large. So if there are going to be savings through negotiating lower drug prices those are going to be much, much greater than $80 billion over ten years. ROMANS: Back in 1984, the last time we tried this and it didn't get through, pharma was an obstacle to healthcare. They were opposed to some of the proposals on the table. What could President Obama have done to neutralize their opposition to universal health care without taking away the government's bargaining power over drug prices?
REICH: Well, that's a very good question. I mean the pharmaceutical agency, industry, and also the AMA and the doctors, the hospitals, they last time around in 1994, and I was there, I had a front seat, they all opposed health care reform because it was going to hurt their bottom line. It was going to rob them of profits they thought.
This time, the Obama administration may be wisely, as a matter of tactics Christine, decided that it would make deals and therefore essentially buy them off so they would not have that very strong opposition that they had before. Well, the problem is, if you buy them off, then you are essentially going to rob yourself and rob the public of the savings that you want to get over the long-term in terms of health care reform.
How do you balance the two? Would it have been possible or is it possible to have a much stronger health care bill that actually keeps the bargaining leverage of Medicare and Medicaid might have over the drug industry and still get the pharmaceutical industry in tow? I don't know.
ROMANS: Mr. Secretary, about 15 or 20 seconds here, do you think that they'd get reform this time around and do you think it looks anything like the proposals that are on the table now? Is there a lot more horse trading in politics before we're done?
REICH: Oh, there is going to be a lot more horse trading, Christine. There is enough momentum behind universal health care reform. I think we will get it, the question is, and what exactly will we get?
ROMANS: It's time now for a heart to heart talk with your parents about their money and their retirement. Why you absolutely must talk to your senior parents before it's too late. Coming up next.
ROMANS: When you were a little kid your parents probably sat you down and talked to you about money. About savings, about budgeting, maybe a little bit of an allowance to show those skills now that you're adult it's time to have that conversation with your parents.
The stock market is doing a little better, most people have lost money in their portfolio, a lot of money because of this financial crises and that includes your retired parents. Your parents are getting close to retiring. Our next guest says it's time to check in on mom and dad's finances and their retirement plan.
Lynnette Khalfani-Cox is a personal finance editor who is with us. It is a tough conversation to have. A delicate conversation to have with your parents, to ask them, look, where are you right now? I mean, are you safe? Are you solid? Are you ready?
LYNNETTE KHALFANI-COX, PERSONAL FINANCE AUTHOR: You used the exact, right words. Delicate. I think that's the key thing if you're going to talk to your ageing parents about their finances, you really do have to approach it with a lot of delicate diplomacy. After all, your parents have been living most likely independently for 70, 60, 80 perhaps-plus years and now just the thought of talking to their children, albeit their adult children about finances could put a lot of fear and apprehension in them.
They might be worried about appearing to have mismanaged their finances; they might fear loss of control. So you really do want to go slow and have a lot of respect when you talk to them about it.
ROMANS: If you can get information from them right away or you want to get as much information as can you before you talk to them what can you do?
KHALFANI-COX: One of the things I think you should do is not just automatically assume it's about extracting information from them. You might offer yourself as a resource to them. You might start by saying, can I help you to organize the bills or get your paperwork in order? Something that's kind of a light touch and easy approach.
Not just, how much is in the 401(k) and do you have enough in the pension to ride you through the rest of your retirement? You can also tell them about resources that might be available to them as elderly citizens. That's the kind of go-slow approach that will help them to feel more confident in talking to you about these matters.
ROMANS: Then before you talk to them, here are some questions you have, is the mortgage paid off? Do they have a 401(k) or pension and have they asked you or your siblings for money? That gives you some clues about where they are.
KHALFANI-COX: Sure, I think that's great to know before you even start the conversation. Because by and large parents are probably going to fit into two categories. One, the parents who need help down the road, perhaps because they need help right now. Knowing whether or not they're asking you or your siblings for money is critical.
Two, the other parents might actual be OK financially, and that will dictate the specific question that you ask. If they already need help, chances are the conversation will be a little easier, because you've had some issues with money already.
ROMANS: Even when I was in high school I was having these conversations with my parents. Believe it or not. I'm the oldest. I remember my dad showing me exactly where all the insurance papers were, in case god for bid something happens. Is a way to open up this dialogue very young and very early. Lynnette what are the most important things people need in case of emergency?
KHALFANI-COX: Well first of all Kudos to your dad for doing something that I can tell you is very atypical. Most parents are not going to sit their high school children down let alone their adult children. But that is a great thing to do. The key is, you know, if you start asking about important financial paper work, whether it is their 401(k) assets, their pension, those kinds of things, you don't want to make about how much is in those accounts or what do you have, necessarily.
You can start by saying, you know, mom and dad, I feel so much more comfortable knowing the basics like where the paper work is or who your financial advisors are just in the event of an emergency. Then I wouldn't feel so stressed if I had to jump in and act in your stead. So you want to know where the will is.
You want to know whether or not they have life insurance, who their agent is, you want to make sure that they have a health care power of attorney and a legal power of attorney. Not the specifics necessarily of all the details but who are you advisors so I can have a list of those or at least where is the important paper work.
ROMANS: Lynnette just real quickly if your parents are asking you for money and they are in trouble and they are asking and you don't have any money, how are you supposed to handle that?
KHALFANI-COX: It's a tough call to make. But I think you can let them know about options. Perhaps a reverse mortgage might be an option, perhaps annuities, they might be able to go to federal or state resources, elder care, and locator.gov is a great one. Benefits checkup.org and N4a.org, all of them will tell you about some free and low cost assistance and resources available for senior citizens.
ROMANS: OK, great and we are going to tweet all of those names. Lynnette Khalfani-Cox thank you so much.
KHALFANI-COX: My pleasure.
ROMANS: Regardless of your own financial situation, the town you live in can make a big difference in your quality of life. We visited one Missouri community working to address local problems that makes life better for its residents.
UNIDENTIFED FEMALE: This is a wonderful place to stay and raise a family. It's progress. It's got beautiful natural resources.
ROMANS (voice over): Spanish Lake, a St. Louis suburb, 25 minutes drive north of the famous arch.
UNIDENTIFIED FEMALE: We have a great population 23,000 folks.
ROMANS: Spanish Lake isn't wealthy. Fewer than 15 percent of residents have college degrees. Compared that with the national average of 27 percent.
TERRI WILLIAMS, HAZELWOOD EAST HIGH SCHOOL PTSA: There used to be a lot of activities for the kids but there aren't the mall doesn't have very many retail stores now and so the kids have to go to other places to shop. A lot of activities that kids were doing they have to go to other municipalities to do those activities.
ROMANS: That's changing. Lottie Wade has a group organizing new activities for local youth.
LOTTIE WADE, SPANISH LAKE YOUTH & FAMILY COUNCIL: We did not have a boys and girls club two years ago. Now we do. But it serves the kids at one school. We need to expand that.
ROMANS: Dora Gianoulakis and her Spanish Lake Community Association are restoring a historic house to create a community center and they launched a website for the area.
DORA GIANOULAKIS, SPANISH LAKE COMMUNITY ASSOCIATIOBN: I see it as an opportunity. Not really so much as a challenge but just a real opportunity for us to help bring people into the association, into the community that have not probably felt part of it for quite some time.
ROMANS: The Parent-Student-Teacher Association of the public high school is making a strong push to help kids go to college.
WILLIAMS: Speakers from universities, taking them on college campus tours, bringing them workshops for the students to help them with their applications.
ROMANS: It's all about creating a better quality of life, recession or not.
WADE: It's a great place to live and to raise a family and we're so fortunate that organizations are working together to strengthen this community.
ROMANS: All right, coming up next, Richard Quest joins us from Hong Kong with a look at how the major financial cities around the world are doing and Richard Quest has some good news.
ROMANS: Time now for the ultimate quest, Richard Quest joins us from Hong Kong. He's spending the next few weeks going from Hong Kong to London here to New York. Can't wait to see him to see how these major financial centers are weathering the economic storm. Richard, what are you finding there?
RICHARD QUEST, CNN ANCHOR: I'm finding that I left London in gloom dismay and despondency. I arrived here in Hong Kong and things are looking very different. Whether it's because of the vast China stimulus package or the fact that there is a can do aggressive Asian spirit people in Hong Kong are certainly far more optimistic than anywhere else that I have been recently.
To put this into perspective, property prices in this city, having tumbled maybe 25 percent after last September, at the luxury end, the luxury end, they are now back to where they were before just about. ROMANS: So, does this bode well for the U.S.? I mean today we had housing numbers that show that existing housing sales were up 7 percent. You got some companies say they are going to start hiring workers back. Do you expect to see this optimism when you head back to this direction?
QUEST: No. Certainly don't expect to see anything like the optimism that we are seeing over here. But to bring this full circle, what they are saying here, what they are realizing is that even though they have economic growth in Hong Kong in the last quarter of just 3 percent, they cannot grow further and they cannot grow faster without the U.S. consumer.
All roads eventually lead back to where you are, Christine. They need, Asia needs, even though it has some growth of its own, intera Asian good growth, it needs the U.S. consumer if things are going to get moving. What they have here is optimism, what they need is Americans to start spending again.
ROMANS: A lot of their growth is because of their stimulus. If they withdraw that stimulus or if they have to tighten lending standards or credit standards in that country, in China in particular is that going to slow -- is that going to slow their advance?
QUEST: That is the big question. The general feeling is that there won't be a withdrawal of stimulus any time soon but there may well be a tightening of the lending, the bank lending which is the same thing. Government money channeled through the banks into the wider economy.
What they really want to see is the United States getting some form of firm footing, not just reaching the bottom as we heard maybe today from Ben Bernanke that perhaps the bottom has been reached and things are getting better. They actually want to start seeing some positive growth numbers out of the United States. When that happens, then all the goods that are over here they will start to be sent back to where your.
ROMANS: All right. OK, Richard Quest in Hong Kong. If anybody wants to know more about Richard Quest custom made suit from Hong Kong they are going to have to become a facebook friend or follow him on twitter at Richard Quest. Thank you so much, sir. We'll see you soon when you come to the United States.
Thanks for joining us on YOUR MONEY. You can follow Ali Velshi and me on facebook and twitter at Christine Romans and at Ali Velshi. Make sure you join us every week for YOUR MONEY Saturdays at 1:00 pm Eastern and Sundays at 3:00. You can also logon 24/7 to CNNMONEY.com. Have a great weekend, everybody.