THE PRESIDENT: Good morning. This week, I traveled to a hospital in Chattanooga, Tennessee, where I visited with doctors and health care experts. We discussed an urgent priority for our Nation, how we can make health care coverage more affordable and accessible for all Americans.

This week, the Department of Health and Human Services released a study that showed why we must act now to reform our health care system. The study forecast that our Nation's health care spending will almost double by the year 2016. If this happens, health care spending will account for nearly one out of every $5 spent in our economy. The study forecast that the government's share of these costs will rise, as well. Unless the system is reformed, within a decade taxpayers will be shouldering nearly half of all health care spending in our Nation.

There's also some encouraging news in this study. It provides fresh evidence that the Medicare prescription drug benefit we enacted is working to help get seniors the drugs they need. Millions of seniors are filling more prescriptions because they now have coverage, yet overall national spending on prescription drugs is lower than it would have been without this program. This is because we set up a system where private drug plans must compete for the business of Medicare beneficiaries. This competition is delivering better prices for seniors and good results for taxpayers. We need to maintain the gains we made by keeping competition in Medicare -- and by opposing any effort that would put the Federal government in charge of "negotiating" and setting drug prices.

We should also apply the same market-based principles to other parts of our health system. Today we have a big problem with our tax code: If you buy health insurance on your own, you do not get the same tax advantages as people who get their health insurance through their jobs. When it comes to health care, everyone should get the same tax breaks.

So I proposed a standard tax deduction for health insurance that would be like the standard deduction for dependents. This common-sense solution will level the playing field for all Americans, whether you get your health insurance through your job or on your own.

One person who would benefit from this plan is Danny Jennings, a father of two who does not have health insurance for his family. I met Danny earlier this week. Under my plan, Danny would save about $4,500 on his taxes. And these tax savings would put basic coverage within the reach of his family.

Now imagine if this standard tax deduction were already in place for people like Danny, and some politician suggested taking it away. Critics would say that the politician was giving an unfair advantage to people who work for big businesses that provide insurance, and harming millions of working families who have to buy their own coverage. The critics would be right.

My proposal would provide the same deduction for all Americans who buy health insurance, whether they get it through their job or on their own. That is fair, and it's the right thing to do.

Another way we can reform our health care system is to support governors who are coming up with innovative plans to help their citizens get health coverage. These governors know their people, and they know their needs. As a former governor, I believe the Federal government ought to help, not hinder, our states as they innovate. So I have proposed the "Affordable Choices" grants initiative. Under my proposal, states that make basic private health insurance available to all their citizens would receive Federal funds to help them provide this coverage to the poor and the sick. By taking existing Federal funds and turning them into "Affordable Choices" grants, we will give America's governors more money and more flexibility, so they can help provide private health insurance for those who need it most.

America has the best health care system in the world, because it puts doctors and patients in charge, encourages new technologies, and finds new ways to improve quality. By giving our states more flexibility and making our tax code fairer, we can reform our health care system and restrain costs. And by implementing these reforms now, we can help ensure every American has a future with better choices, better care, and greater hope for a healthy tomorrow.

Thank you for listening.