WOLF BLITZER: Joining us now is Linda Douglas, the communications director for the White House Office of Health Reform.

Linda, thanks very much for coming in.

LINDA DOUGLASS, WHITE HOUSE OFFICE OF HEALTH REFORM: Thanks for having me.

BLITZER: Is the president ready to accept a compromise that would remove this so-called public option from the agenda?

DOUGLASS: Well, we're certainly not going to negotiate this right here, Wolf. I mean what the president has said clearly and consistently is that he wants to make a -- make it possible for people to have choices, to have lower costs, to produce competition in the insurance market. That's the reason he talks about the public option.

That would be an option available to people who don't have insurance or who are underinsured. They could go out into the marketplace, where there are some private plans, and there would also be a low cost public plan that would help, you know, increase competition, provide choices that are simply not available today.

BLITZER: But if there's no desire in the Senate -- no opportunity to support that public option, there's a compromise proposal that's being offered, that would be cooperatives that would be created around the country.

Let me repeat the question, would that be OK with the White House?

DOUGLASS: Well, as I said, I'm not going to negotiate this with you, Wolf. I mean, as we've seen, the House has produced a bill that has a public option. One of the Senate committees has produced a bill with a public option. We understand that the Senate Finance Committee is looking at the co-op proposal that you described, which is an idea which they say would increase competition and lower costs. We haven't seen the details of what they're actually proposing. So we have to take a look at it and see what it is.

BLITZER: But you are open to that co-op proposal?

DOUGLASS: Well, you know, we have to see what it is. The president's goals are very, very clear -- it's got to lower costs, it's got to increase competition, it's got to keep the insurance companies honest, get the private insurance companies to get in there and compete for your business. That's the goal. And we'll see if this does that.

BLITZER: Our CNN contributor, Paul Begala, a Democratic strategist, wrote a piece in "The Washington Post" in which he made the case to the left, to the liberal part of the Democratic Party, you know what, don't hold this up because you want perfection. He said this. He said: "We cannot achieve perfection in this life and if that is our goal, we will always be frustrated. The question is not whether I or other progressives will support a health reform bill that includes everything we want, but rather whether we will support a bill that doesn't."

Is that goods advice from Paul Begala?

DOUGLASS: Well, Paul Begala is always a very smart fellow. But right now, what's going on is a very robust discussion about what kind of health reform legislation the Congress will produce, that is built upon the president's principles, that would lower costs, not add a penny to the deficit, protect every American from unfair insurance regulations that deny you coverage if you get sick. All of the bills that are emerging right now -- four out of five of the bills are built upon those principles. And the final bill that you're talking about appears to be going in exactly that direction.

There's agreement, Wolf, on 80 percent of the provisions between all of these bills right now. We are absolutely closer than we've ever been. And we're confident that we're going to have success when Congress returns and finishes working out the differences over the final provisions.

BLITZER: Did the White House make a secret deal with pharma, the pharmaceutical lobby here in Washington, that would limit how much cost reductions they would have going forward over the next 10 years?

DOUGLASS: Here is what -- what happened. The White House, the pharmaceutical industry, the Senate Finance Committee agreed that the pharmaceutical industry would contribute $80 billion over 10 years -- a very, very substantial sum of money that would lower the high cost of prescription drugs for seniors, who are paying exorbitant costs for prescription drugs. That was a crucial piece of this deal, as well as other steps that they would take to lower costs.

It's an $80 billion agreement. That's what the White House, the Senate Finance Committee and pharma have agreed to. And the final details are being worked out with the -- with the Senate Finance Committee.

BLITZER: Did pharma, in exchange, make a promise of $150 million to pay for advertising to help the president's plan go forward?

What -- what you have, Wolf, is this deal that is $80 billion. And we are very pleased, obviously, that -- that the pharmaceutical industry agrees with us, that there's an urgent need for comprehensive health insurance reform that's going to protect Americans from unfair rules, from rising costs. They agree with that. They've agreed with it from the beginning. That's why they came to us and we worked out this agreement with the pharmaceutical industry. And they're supporting health reform legislation. And that is good for the country.

BLITZER: So is part of the deal that they would support this legislation, go forward with $150 million in advertising?

DOUGLASS: You know, Wolf, part of the agreement here is that we're all going to work together to bring comprehensive health reform. I mean, clearly, the pharmaceutical industry said we are going to support comprehensive health reform. And that's what they're doing.

BLITZER: What about the concern that some, like Henry Waxman, on the House side, have raised that this would restrict the ability, for example, to import cheaper drugs from Canada, for example?

Is that part of the deal?

DOUGLASS: You know, there was -- there was a discussion about many of the proposals that have to do with the need to re-import drugs from other countries because our drug costs are so high. And one of the discussions was -- and this is (INAUDIBLE) particular part of the agreement -- but one of the discussions was well, maybe this won't be necessary, because drug prices are going to be lower under comprehensive health reform.

So drug prices are going to go down. And if drug prices are going to go down, maybe some of these olds debates that we've had in the past over how to solve the prices -- the rising price of pharmaceuticals -- won't be necessary anymore.

BLITZER: The Senate, at least some members of the Senate Finance Committee are saying they're going to remove what's in the House language, the end of life provisions to provide counseling for living wills and for hospices, stuff like that.

Is that OK If that revision, which is -- some of the critics call them death panels -- if that's removed from the final version?

Is that OK with you?

DOUGLASS: You know, first of all, the notion of death panels is such a shocking phrase to be used in the context of health insurance reform. It is so cruel to seniors to be talking in these terms when what the House of Representatives has in their bill is a provision that would make it possible for seniors to seek voluntary, professional advice about end of life decisions, such as a living will.

We've heard what you've -- seen reported what you've said about the Senate Finance Committee -- don't have any information on how they're going to proceed along those lines yet. That's something that we've seen in the media.

So, you know, the most important thing now is that people have the truth about the provision that is in the House bill, which, again, would just be strictly voluntary and make it possible for seniors to get information about very, very -- a very difficult time in life, when it's hard to talk to your family, when you want to think these things through and you might want some professional advice.

BLITZER: Tell us about David Axelrod's e-mail that was sent out, because some -- some of your critics are saying this is inappropriate for a senior adviser to the president to be sending out what he hopes will emerge as viral e-mail.

DOUGLASS: Well, you know, the White House has been getting tens of thousands of e-mails from citizens. They have questions about everything that their government does. But they're certainly looking for information about health reform legislation, as they're struggling with high costs, as they're struggling with unfair insurance regulations.

And what this e-mail does is, first of all, tell them what kinds of changes will be in the law to protect them from these unfair regulations. And it also talks about some of these myths that are out there -- some of these completely untrue stories that people are receiving in viral e-mails. And one of the best ways to communicate with people out in the country with questions is to send an e-mail. And that's what we did.

BLITZER: Linda Douglass is the communications director for the White House Office of Health Reform.

You've got a tough job, Linda.

Thanks very much for joining us.

DOUGLASS: Thanks, Wolf.