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The following is the Tavis Smiley Show Transcript:

August 27, 2009

Tavis Smiley: Ron Williams is the CEO of Aetna, one of the leading health insurance providers in the nation. Under his watch, Aetna came out of a period of turbulence into one of growth and profit. He joins us tonight from Hartford. Mr. Williams, an honor to have you on the program, sir.

Ron Williams: Well, it's an honor to be invited on the program, thank you very much.

Tavis: My pleasure. My time with you is limited so I want to get right into what I mentioned a moment ago before you came online, which is that you are on record as being opposed to the much-talked-about public option, but yet you want for every American universal healthcare. Explain how that works.

Williams: Well, I think the fundamental issue for us is to make certain that we focus on getting and keeping everyone covered. And while many people strongly believe in the public options for reasons I'll be glad to explain later, it really is a diversion. We have 45 million uninsured and if we really understand who those people are we think that there are ways to address the barriers to insurance that they face.

Tavis: All right, so tell me more, then. Who are all these persons, and how do we address the barriers?

Williams: Well, let's take the 45 million and segment them and break them down. There are 11 million of the 45 million who are eligible today for a program like Medicaid or the state children's health insurance program. We don't find them, we don't get them enrolled, and therefore, they are uninsured. And one of the things I would like to see is more energy and enthusiasm to find and locate those people who are eligible today for insurance but we simply don't reach out to find them.

If we take another part of the uninsured, about 10 percent are college and university students. We know where to find them, they're very inexpensive to insure. And so between those eligible for the Medicaid program and the college students, we actually would be able to cover a significant portion of that group.

We also recognize that there are problems with the individual insurance market and we've proposed some very substantive changes that we think could make that market work better for everyone.

Tavis: At the end of the day, your suggestion about how to make the market work better notwithstanding, many believe that the main reason why a public option is necessary is that it's the only way that you all, respectfully, will behave. The only way to keep these costs contained and get them under control is to provide that good old American ideal known as competition so that if there is a public option people don't have to sign up for it, but if they have an option to choose the public plan or Aetna or anything else, competition keeps the costs down. Your thoughts?

Williams: Well, I would say we are big believers in competition and we believe that there are more than 1,300 health plans in the country that provide competition in most communities if not all communities. We also believe that when you think about health insurance premiums there's a confusion between what really drives the cost of health insurance, which is really the cost of healthcare.

The premium is like having a thermometer that reads your temperature that says your temperature is 103. And we can take the thermometer and run it under cold water but it doesn't change your temperature. And so if we want to make healthcare insurance more affordable we really have to understand what is driving healthcare costs, and I think that comes down to the fact that all of us really value and appreciate the wonderful things that technology can do.

And I think the president, through his leadership, has really recommended some programs in health information technology, prevention and wellness, tort reform, and other things that can slow down the rate of increase.

So if we slow down the rate of increase in healthcare costs, health insurance will, in fact, be more affordable for everyone.

Tavis: But if prior to the government getting involved, either through more regulation, which a lot of folk in Washington have been against, or by offering a public option, so take either one of those issues, if prior to government getting involved in one of those two ways you all, that is to say, the industry, couldn't figure out how to get these costs down, why now does the industry come saying, “Oh, we can get the costs down without government getting involved?”

Williams: Well, it's not a matter simply of getting the costs down. We believe that's absolutely essential for affordability but we have to understand that the proposals that Aetna made going back to 2005 and the industry has endorsed is eliminating the use of pre-existing conditions, where an individual's medical status is a basis to be issued insurance.

Now, in order to eliminate that, we have to have everyone in the insurance pool. Very simply put, if you can buy insurance whenever you wanted, what the evidence shows is that people wait until they need it. Then they buy it, then they use it, then they drop it.

So in order to really bring everyone in, eliminate the use of your own individual health circumstances, we need to bring everyone into the pool. That way we can get and keep everyone covered. And we believe that those people who can afford insurance should be expected to buy it, and that's for the government to decide what that means, and those who can't afford it should receive either tax incentives, subsidies, vouchers - some mechanism to be able to participate in the market.

Tavis: But isn't that the problem now, though? That even for all the money that we pay into the system, one could argue through a long list of answers that Americans are not getting what they ought to be getting for the kind of money that we're paying into the system as it is now?

Williams: Well, I think that there are many people who do question the value that the healthcare system is delivering, and many research studies suggest that as much as one-third of the healthcare costs really is wasted or is not producing the value. But the answer to that is really to invest in healthcare information technology.

How many times have you been to one doctor to take a test, gone to another doctor, and been asked to repeat the same test? That can, in fact, be an example of waste. If we connect the system electronically then you can get the care that you need, but it's an example of squeezing the waste out of the system.

I did want to make one other point, because I think this whole question of the public program is really a diversion against the central goal that we should have to get and keep everyone covered. One person who's uninsured is one person too many.

Tavis: If, in fact, it is a diversion, why has the industry, according to the "L.A. Times," at least, spent $35 million already in this year - Aetna contributed some of that money - to fighting against this plan, this idea?

Williams: Well, I think I would view it that what we have focused our energy on at Aetna is really working to get the right reform that makes certain everyone gets covered. I don't think that everyone will ever agree on exactly every aspect. We view this as a nonpartisan issue. We're very supportive of what the president does. I meet with Republicans, I meet with Independents. We meet with anyone who's really interested in the right solution to try to get more people covered.

So I think our point of view is if you look at the things people agree on, I think people agree on about 80 percent of the things that are talked about in the context of health reform. I think people agree that we should get everyone covered. I think there's a lot of agreement that those who can afford health insurance should be expected to buy it.

There's agreement that the industry should not use health status as long as we have a well-synchronized requirement that everyone purchase insurance. So I think the areas of agreement are enormous and I think represent important opportunities for the country.

We look at Medicare and the implementation of Medicare, the implementation of Medicaid, the children's health insurance program, the Medicare drug program - these all represent important incremental advancements that have been good for our citizens.

Tavis: When you have a country like ours where 80 percent of the people who don't have insurance - those numbers you mentioned earlier - 80 percent of those persons come from families, live in families where there are part-time or full-time workers - it's this term that I hate, the "working poor." I think in America, if you work, you ought not to be poor.

But how is it that we can have people who are working every day in this system and still don't have access to healthcare?

Williams: Well, I think we have to look at the nature of how people get healthcare. For example, there are almost 180 million people who are in employer-sponsored health plans who are receiving good care. And while certainly there's room for improvement in terms of the value people are getting, I think fundamentally the system works, and works reasonably well.

Where we see the big problem, which you're pointing out, is in the small employer market and the individual market, where people are self-employed businesses of one, if we look at small businesses, for example, if you take businesses above 10 employees, about 85 percent of those businesses actually offer insurance to their employees.

But the employees don't necessarily make enough to be able to purchase that insurance, and that's where the whole question of can we afford tax subsidies, vouchers, some mechanism to help those people who really can't afford it.

In the individual market one of the big issues is really the use of this health status, individual health status, which I've talked about, and I think the industry is prepared to waive that as long as we have this well-synchronized expectation that everyone participate in the system.

Tavis: So finally, I want to close here where we began. There are many who are arguing right now that if we have healthcare reform that does not include a public option, it really isn't reform, it has been an exercise in futility. Your view of that is altogether different.

Williams: Yeah. I would say we have to understand that when we look at the level of reimbursement that the average hospital receives on Medicare, Medicare pays the hospital 80 percent of its cost. That difference that the hospital doesn't collect is turned around and played on the shoulders of the employer-sponsored system or even the uninsured, who have to pay the hospital at retail rates.

I think one of the things that we encourage is if Medicare would reimburse hospitals at a higher level, we think it would reduce the rate of the employer-sponsored insurance.

We believe fundamentally that if we understand the issues that are prohibiting individuals from getting health insurance, the government passes laws and regulations and structures those in ways that get at the fundamental problem, that we can solve this problem in a way that's good for everyone without creating the role of government as both a player in the health plan business and the referee in the business as well.

Tavis: Ron Williams, the CEO of Aetna. He has turned that company around. This debate, of course, will continue in the coming weeks about how we reform, if in fact we can get that done, our healthcare system as we know it. Mr. Williams, nice to have you on the program. Thanks for sharing your insight, sir.

Williams: Thank you very much for inviting me.