CNN "The Situation Room" - Transcript

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BLITZER: But can that happen? Here to talk about the president's health care goals and other issues are Democratic Senator Jack Reed of Rhode Island and Republican Senator Kay Bailey Hutchison of Texas. And they're both members of the appropriations committee. Senators, thanks very much for coming in.

All right, let's talk about health care, which is the big issue facing Congress right now. And I want to see if the two of you, we can get some common ground on some of the most sensitive issues that still have to be resolved. For example, the government option of public health insurance program sponsored by the government to compete with the private insurance companies. Senator Hutchison, is that something you would be opened to?

SEN. KAY BAILEY HUTCHISON (R), TEXAS: You know, it's a very -- it's very difficult to say, particularly with the proposals on the table and the cost and the disincentive for small businesses to hire people and give them private coverage. I don't think that it is good for our country and our health care system to have a big government plan that starts bleeding off the private insurance which gives the quality and the choices that Americans have come to know and expect and like. So that's the concern that we have about that big government plan, that it will cost so much and that it will start bleeding off the private sector and the choices and the quality.

BLITZER: All right. So you don't like it? Senator Reed, if there's no government plan in there, if there's no public option as it's called, a government health insurance company, would you be willing to go along with that?

SEN. JACK REED (D), RHODE ISLAND: I prefer the private option. We voted a private option - a public option, rather, out of committee. And we provided this public option so that it would be a fair competitor with private insurance. Not displaced private insurance. In my state, 80% of the market is controlled by two companies. So it's hardly a highly-competitive market for health insurance. So the competition is necessary. And frankly, the hope is that, you know, fair competition, not tilted towards one side or the other will result in cost controls over time.

BLITZER: So you disagree on this government option. But there's a compromise proposal that some of your colleagues are putting forward, which calls for cooperatives. Not exactly government run health insurance operations, but not necessarily completely private either. Is that, Senator Kay Bailey Hutchison, something you could live with?

HUTCHISON: Well, I think the key is something that Jack just said. And is a fair competition. Because if you give the advantage to something that is less expensive that also rations health care, then that is going to take away the options particularly where you are taxing or fining small businesses for not giving health care to their employees. And I think when you couple a disincentive for hiring with the public option that's going to be less expensive...

BLITZER: So...

HUTCHISON: ...but also rationing in many ways...

BLITZER: But what about cooperatives?

HUTCHISON: ...that's the bad combination.

BLITZER: Are you ready to support cooperatives, Senator Kay Bailey Hutchison?

HUTCHISON: Well, I think the devil is in the details, Wolf. What is in a cooperative? And will it be something that would be affordable and offered to small businesses?

BLITZER: All right.

HUTCHISON: So that they can give affordable options to their employees.

BLITZER: I hear you saying you're open-minded on that option. What about you, Senator Reed?

REED: Well, I've actually been talking with Senator Conrad, who's a major proponent. And one suggestion I made is we have in my home state essentially a cooperative made up of the federal community health centers. And they provide very, very good effective integrated care. It's an existing enterprise. That might be something that could be a fallback position if we cannot muster the support for the public option as it's come out of the committee. I hope we can muster the support, though.

BLITZER: Do you support, Senator Reed, a tax increase on rich people to help pay for insurance for those who can't afford it?

REED: I think we have to first pay for this. We in the last decade, we have embarked on many proposals that were not at all paid for. They were deficit financed. Medicare Part D, expansion, these things. We have committed to paying for it. I think one point that has to be made, though, is the president has already obtained concessions from major industry players like the insurance companies, the pharmaceutical companies, the hospitals that they will effectively control or give up billions of dollars over the next ten years.

BLITZER: But you - you support this tax increase, this surtax as it's called.

REED: Well, I'm trying to stay open minded about these tax proposals because the finance committee has not yet really focused on one or the other on our side. There's been some proposals, for example, about not taxing directly high income Americans, but taxing insurance policies, the very, the most expensive, the most comprehensive insurance policies So there's a lot in play here.

BLITZER: All right.

REED: But I am committed to and making sure that this is paid for.

BLITZER: What about you, Senator Kay Bailey Hutchison? Are you open to having a tax increase on the wealthiest Americans?

HUTCHISON: Well, you're talking about a lot of the small businesses in America to pay for this. And I think that's a disincentive for hiring at a time that we need people to hire and get our economy going again.

Also, let me just talk to you about where I am right now. And you can hear the loud speakers. I'm in an emergency room at Parkland Hospital. That is the county hospital that treats indigent patients. And it's the teaching hospital. And part of the pay-for that has come out of the House bill is to take money from this hospital and every hospital, that is a teaching hospital, or one that provides care to indigent patients.

In Texas, because we have such a high number of uninsured, that amounts to almost a billion dollars a year that goes to cover these indigent patients. And when you're talking about cutting these hospitals in order to pay for a new plan, I don't think the numbers that you're going to add in the Medicaid option is going to outweigh the continued cost that these hospitals have and we'll have to cut back services to pay for.

BLITZER: I'll give you the last word, Senator Reed. I guess the bottom line is, there's still an enormous gap between the Democrats and the Republicans, an enormous gap between the House and Senate. And it's going to take quite a while if there's going to be a deal for this to get resolved?

REED: I think this is a terribly complicated set of issues. And in the substance, not just the politics. And so there is a necessarily a lot of detailed discussion back and forth. I don't think we're as far apart as it might appear. I know Senator Baccus on the finance committee is in communication, reaching out, trying to develop a bipartisan approach. I think, hopefully, that will be the best approach.

But we're bound and determined to complete this legislation this year and to deal with the one of the points that Kay made. The millions and millions of uninsured who are, I think, will be much better off under this program in Texas or Rhode Island or elsewhere, than under the current status quo is just not sustainable.

BLITZER: Senator Reed, thanks for coming in.

REED: Thank you.

BLITZER: Senator Hutchison, thanks to you as well.

HUTCHISON: Thank you, Wolf. Thank you.

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