(Editor's Note: This transcript was provided by the White House on July 1, 2009.)

Annandale, Virginia

It's great to be here in Annandale, and I'm looking forward to answering
questions from the folks here with us today as well as the Americans
who've submitted questions online.

But before I begin, I just want to say a few words about where we are as
a nation and where we need to go.

We are living through extraordinary times. This generation of Americans
- our generation - has been called to confront challenges of a magnitude
unmatched in recent history - challenges that few generations of
Americans have ever been asked to confront. In addition to the
immediate threats we face - two wars and a deep recession - our economy
has also been weakened by the failure to solve problems that have
plagued us for decades: the crushing cost of health care, the state of
our schools, and our dependence on foreign oil.

Now, I know there are some who say that in tackling all these problems,
my administration is taking on too much at once - that we're moving too
fast, too soon.

Well I say that America has waited long enough. It's not too soon to
fix our schools when we're already behind other nations in graduation
rates and achievement. It's not too soon to wean ourselves off dirty
sources of energy when we've been talking about our oil dependence since
Richard Nixon was president. It's not too soon to reform our health
care system when we've been talking about fixing it since Teddy
Roosevelt was president.

We are at a defining moment for this nation. If we act now, we can
rebuild an economy that is strong, and competitive, and prosperous once
more. We can lead this century as we lead the last. But if we don't
act - if we let this moment pass - we could see this economy sputter
along for years, if not decades. We could see our children inherit a
world that is poorer and more dangerous than the one we found. I know
that people say the cost of fixing our problems is great, but I can
assure you - we have reached a point where the cost of doing nothing is
far greater.

Nowhere is that more true than when it comes to the cost of health care
in America. In the last nine years, premiums have risen three times
faster than wages. If we do nothing, they will rise even higher. In
recent years, over one third of small businesses have reduced benefits
and many have dropped coverage altogether since the early 90s. If we do
not act, more will lose coverage and more will lose their jobs. Unless
we act, within a decade, one out of every five dollars we earn will be
spent on health care. And for those who rightly worry about deficits,
the amount our government spends on Medicare and Medicaid will
eventually grow larger than what our government spends today on
everything else combined.

The stories behind these numbers are real and they are heartbreaking.
For over two years, I've heard them in town halls just like this one. I
read them in letters every day. And so many of you have asked questions
and talked about your struggles on our website, healthreform.gov.

I still remember the story of the young mother I met in Wisconsin a few
weeks back. She has bone cancer and two young children. She's
thirty-five years old. She had a job, her husband has a job, and even
though they've got insurance, their medical bills have still landed them
in deeply in debt. And now, instead of worrying about how she'll get
well, all this mother can think about is whether she's going to be
leaving that debt to her husband and her children if she doesn't
survive.

This is not a problem we can wait to fix. This is not something we can
keep putting off indefinitely. This is about who we are as a country.
And that's why we're not going to pass health care reform ten years from
now, or five years from now, or even one year from now. The United
States of America will have health care reform in 2009. We will get it
done.

We have already made great progress in Washington. In the last few
weeks, the pharmaceutical industry to agreed to $80 billion in spending
reductions that will make prescription drugs more affordable for our
seniors. Last month, doctors and hospitals, labor and business,
insurers and drug companies all came together and agreed to decrease the
annual rate of health care growth by 1.5 percentage points -- saving $2
trillion or more over the next decade. That will mean lower costs for
all of us.

And in the past two weeks, a committee in the Senate led by Senator
Kennedy and Senator Dodd has been making tremendous progress on a plan
that would hold down costs, improve patient care and ensure that you
will not lose your coverage if you lose your job, change your job, or
have a pre-existing medical condition.

But now we need to finish the job. There is no doubt that we must
preserve what is best about our health care system, and that means
allowing Americans who like their doctors and their health care plans to
keep them. But we also have to fix what's broken about health care in
America - and that means permanently bringing down costs for everyone.

To do this, we have to build on the investments in electronic medical
records that we've already made in the Recovery Act - records that will
reduce medical errors, save lives, save money, and still ensure privacy.
We need to invest in prevention and wellness programs that help
Americans live longer, healthier lives. And the biggest thing we can do
to bring down costs is to change the incentives of a health care system
that automatically equates expensive care with better care.

We have to ask why places like the Geisinger Health system in rural
Pennsylvania or Intermountain Health in Salt Lake City can offer
high-quality care at costs well below average, but other places in
America can't. We need to identify the best practices across the
country, learn from the success, and replicate that success elsewhere.
And we should change the warped incentives that reward doctors and
hospitals based on how many tests or procedures they prescribe, even if
those tests or procedures aren't necessary or result in medical
mistakes. Doctors across this country did not get into the medical
profession to be bean counters or paper pushers. They became doctors to
heal people. And that's what we must free them to do. This has to be
about the best care, not just the most expensive care. It has to be
about treatments that work, not just more treatments.

It's also time to finally provide Americans who can't afford health
insurance with more affordable options. This is a moral and economic
imperative, because we know that when someone without health insurance
is forced to get treatment at the ER, all of us end up paying for it -
to the tune of about $1,000 per person.

So what we're working on is the creation of something called a Health
Insurance Exchange - a marketplace which would allow you to one-stop
shop for a health care plan, compare benefits and prices, and choose the
plan that's best for you. None of these plans would be able to deny
coverage on the basis of a pre-existing condition, and all should
include an affordable, basic benefit package. And if you can't afford
one of the plans, we should provide a little help to make sure you can.
I also strongly believe that one of the options in the Exchange should
be a public insurance option - an option funded by premiums, not the
government. This public option is important because if the private
insurance companies have to compete, it will keep them honest and help
keep prices down.

Now, I know one of the biggest questions on everyone's mind is how to
finance reform. And that's why we've committed to paying for this
without adding to our deficit over the next decade.

About two-thirds of the cost will be covered by reallocating money
already in our current health care system. Much of this money adds
nothing to quality of care for patients - it fattens the bottom lines of
insurers and other health care providers. As an example, we're on track
to spend $177 billion over the next decade in unwarranted subsidies to
insurance companies that add nothing to the quality of care. $177
billion. Those are your tax dollars, and you deserve better in return.
That's why we'll redirect those resources toward lowering costs,
expanding coverage, and improving quality for all Americans.

In fact, between slashing wasteful spending, cost savings, and
identifying new sources of revenue, we've already put almost $950
billion on the table to help pay for reform without adding to our
deficit. And that doesn't even include the savings that these reforms
could achieve - savings that will reduce our deficit over the long-term.

So we are making progress on health care reform and we are identifying
ways to pay for it. But the hardest part is yet to come - because
that's the part when the naysayers and cynics use every excuse and scare
tactic in the book to stop reform from happening. And it's already
happening as we speak.

If you hear this criticism, ask the same question that I always ask:
"What's your alternative? What do you say to all those families whose
medical bills have driven them into bankruptcy? What do we tell those
businesses that are choosing between closing their doors and letting
their workers go? What do we say to every taxpayer in America whose
dollars are propping up a system that is driving us further and further
into debt?"

This isn't just about those Americans without health care. This is
about every American - because if we do not act to bring down costs,
every American's health care will be in jeopardy. All of us are in this
together.

When it comes to health care, or energy, or education, the naysayers
seem to think that we can somehow just keep doing what we've been doing.
But everywhere I go, I meet Americans who know that we can't. They know
that change isn't easy. They know that there will be setbacks and false
starts. But they also know this:

We are at a rare moment when we have been given the opportunity to
remake our world; a chance to seize our future. And as difficult as
that sometimes is, what is inherent about the American spirit is the
fact that we do not cling to the past in this country. We always move
forward. And that movement doesn't begin in Washington - it begins with
Americans from every corner of this country who stand up and face that
future unafraid. And if we do that now - with health care, with energy,
with education - then someday we will look back at this moment as the
time when we did what's necessary to leave our children an America that
is as bold, ascendant, and imaginative as the America we inherited from
our parents. And with that, I'll turn it over to my friend and advisor
Valerie Jarrett, who will take your questions.