TAPPER: Joining me now from Michigan, the president's top cabinet official in charge of health reform, Secretary of Health and Human Services Kathleen Sebelius .

Secretary Sebelius, thanks for joining us.

SEBELIUS: Good morning, Jake.

TAPPER: Critics say they're uneasy about end-of-life care measures being discussed within the context of cost-cutting. Can you understand that discomfort?

SEBELIUS: Well, I think end-of-life discussions are very, very personal and very difficult, very difficult for family members, very difficult often for people to confront. My own mother spent 10 weeks in three different hospitals before she died, and I can tell you, it was the most agonizing, most painful, most terrible time for not only me and my siblings, but for my dad.

And what every family wants is good information and an ability to make a decision that suits their loved one the best way that the family is involved and engaged. And I think it's really horrific that some opponents of the health reform bill have used this painful, personal moment to try and scare people about what is in the bill.

Nothing could be further from the truth that there's somehow a death panel. If anything, you know, seniors should welcome the fact that doctors would have a payment provided to sit down with family members, if they choose, and -- and have a discussion.

We were desperate to do that. There were way too many specialists in and out of the room and way too little time to actually sit with someone and try to understand what was going on in my mom's case. And I -- I talk to people each and every day who are having that same difficulty.

We wanted to make sure doctors were reimbursed for that very important consultation if family members chose to make it, and instead it's been turned into this scare tactic and probably will be off the table. And that's not good news for the American public and not good news for family members. TAPPER: Well, that's what I was going to ask, because it's not just opponents who have discomfort about talking about end-of-life care within the context of cost-cutting, because the reports are that the Senate Finance Committee is not going to include anything having to do with end-of-life care measures, and that -- that was dropped even before this brouhaha prompted by former Alaska Governor Sarah Palin . The House Democratic bill, of course, does have those provisions.

How important is it to the Obama administration that end-of-life care be addressed in health care reform?

SEBELIUS: Well, again, it isn't about cost-cutting. It's really about providing some comfort and opportunity for family -- to empower family members and to empower, actually, often the patient who is coping with some steps that need to be taken and to make good decisions.

What you need is somebody who can sit down with some medical advice, who knows the family, who knows the patient, and -- and have a conversation, and often that doesn't happen or it's very difficult to have happen. Doctors are too busy; people are rushing in and out of hospital rooms; you're trying to make decisions.

So this was actually to provide reimbursement for that consultation, if the family chose to have it. I'm hoping that, at the end of the day, that it will be part of the overall package, because it's one of the most important conversations a family may ever have. And certainly to try and get some good information, make some decisions, include the patient in those decisions, have a realistic discussion about what's happening and -- and what the next steps might be, I think, is -- is so beneficial for family members, who often are operating in the dark and -- and very conflicted about what to do next, what's best for their loved one, what's best for the next steps.

TAPPER: So you're hopeful, but if I'm reading you correctly, it's not a deal-breaker?

SEBELIUS: Well, I don't think, again, this is a -- a comprehensive measure that looks at all of our health care system, lower costs for all families, providing good coverage, changing the rules finally for insurance companies so they don't get to pick and choose who in America gets coverage and who doesn't, making sure that the bill doesn't add to our deficit.

I mean, those are fundamental principles. I hope this element is part of it, because it's something that people talk to me about all the time. And as I say, I've been through it personally with a -- with a mother who was very ill at the end of her life, and just having that kind of conversation and consultation, which we finally did, but it was weeks into her hospitalization that the conversation took place, it was very helpful, but it would have been a lot more helpful if it had taken place weeks earlier.

TAPPER: OK, I'll -- I'll take that as a "yes" and then we'll move on. The president often -- and he did last night in Colorado -- says to the American people that, if they like their doctor, they can keep their doctor. If they like their insurance plan, they can keep their insurance plan. But according to the Congressional Budget Office, if a public plan, if a public option is introduced, at least 2 million Americans will be switched by their employer from a private plan to the public plan.

Now, that doesn't get into the whole issue of employers dropping health care coverage in general and all the people that will be added to the rolls, and I understand that. But how can the administration make the promise that if you like your insurance plan you can keep it, when CBO and other analysts estimate that some people will be switched from private to public?

SEBELIUS: Well, I think, Jake, if you -- if you think about a marketplace option and new plans being created in Toledo, Ohio, or in California or in Florida, the network of doctors is likely to be pretty identical. A lot of plans exist in the same marketplace, and doctors are part of a variety of networks. So the idea that you would keep your own doctor is highly likely.

The other thing about the -- the new marketplace is, I think, the president is eager to stabilize the employer marketplace. Small- business owners right now are dropping coverage because they can't any longer afford it. They can't stay in the market.

With the new tax incentives that are part of health reform, small-business owners would be encouraged to actually stabilize their insurance plans, to offer coverage to their employees. They'd have tax credits. They'd have some help for the low-income employees to be able to afford the coverage.

So I think, if anything, it wouldn't dismantle the present market. It would actually help to provide a more stable private marketplace, which right now serves 180 million Americans very well. People like those plans. They want to make sure that if they have employer-based coverage that they like, they can keep it. And this would actually encourage and help employers to stay in the market.

On the other hand, if you lose your job, right now you lose your coverage. And -- and the new reform plan would make sure that you had an affordable option even if you lost your job, if you wanted to go out on your own and start your new business, which lots of people want to do, you wouldn't lose your health coverage.

So it would have some choices for consumers to make so they wouldn't have the kind of job lock that we see now across America.

TAPPER: Lastly, Secretary Sebelius, and I would remiss if I didn't bring up that this is back-to-school season and there are a lot of parents, including me, who are very anxious about H1N1 and the pandemic that is expected in the U.S. More than 400 Americans have died from H1N1.

What should parents do as they send their kids back to school? We know the vaccine won't be ready until October. What steps do they need to take now?

SEBELIUS: Well, we want every parent to have at a minimum a back-up childcare plan, to know if their child gets sick, who's going to be home and -- and take care of that child? What's the alternate caregiver strategy?

Because this virus spreads quickly child to child. Schools are taking preparation to get ready with hand sanitizers and frequent hand-washing, teaching your children to wash their hands, singing "Happy Birthday" to themselves as they wash their hands is good strategy. Coughing into their sleeve, not into their hands is also a really good strategy, because we know that we want to limit the number of germs that spread from child to child.

And I think, hopefully, we will engage schools as good vaccination partners. We anticipate having school-based vaccination clinics as soon as they're available and getting kids the protection that they need.

But in the meantime, it's about limiting the spread of the disease, and there's lots of, you know, kind of mitigation factors, washing your hands, coughing into your sleeve, staying home when you're sick at least 24 hours after the fever disappears, the CDC says that's the safe time to send your child back to school, but don't share it with their classmates and playmates.

TAPPER: All right, Secretary Sebelius, thanks so much. We wish you luck with the H1N1...

SEBELIUS: Thanks, Jake.

TAPPER: ... and we hope for the best there.

Now, for a sense of where the health care debate is going in the Senate, we're joined by Republican Senator Orrin Hatch from Utah and Democratic Senator Arlen Specter from Pennsylvania.

And, Senator Specter, let me start with you, since you were in the rhetorical line of fire in town halls throughout the Keystone State this week, let's take a look.

(BEGIN VIDEO CLIP)

(UNKNOWN): You're a socialist, fascist pig!

(UNKNOWN): Go back to Washington, D.C., and tell those people to do what the president said that I should do, is shut up and get out of the way.

(UNKNOWN): One day, God's going to stand before you, and he's going to judge you.

(UNKNOWN): There is nothing un-American about me.

(END VIDEO CLIP)

TAPPER: That's a lot of anger. Where does it come from, Senator Specter?

SPECTER: A variety of factors, Jake. I think people are very nervous because so many have lost their jobs, and I think that the uncertainty of the health care bill -- remember, we don't have one in the Senate yet, and none has come to the House floor, but I think we have to bear in mind that, although those people need to be heard and have a right to be heard, that they're not really representative of America, in -- in my opinion.

We have to be careful here not to let those town meetings dominate the scheme and influence what we do on health policy. There are a number of issues here. One is that, while they were organized and have a right to be organized, as John Podesta has pointed out, there's real effort here to make this the president's Waterloo. That was stated specifically by a Republican senator.

And we also can't allow these kinds of town hall meetings to dominate the political process. That would be destructive of what we need to do to figure out, what is the best approach?

TAPPER: And, Senator Hatch, let me go to you. Speaking of dominating the political process, former Alaska Governor Sarah Palin referred to a provision in the House bill as a death penalty -- as a death panel, rather. Your colleague, Alaska Senator Lisa Murkowski , said this in response to Senator -- to Governor Palin.

(BEGIN VIDEO CLIP)

MURKOWSKI: It does us no good to incite fear in people by saying that, you know, there's -- there's -- these end-of-life provisions, these death panels. I'm so -- quite honestly, I'm so offended at that -- that terminology, because it absolutely isn't.

(END VIDEO CLIP)

TAPPER: Senator Hatch, who's right, Governor Palin or Senator Murkowski?

HATCH: Well, Jake, I don't think I'm going to make that decision. You know, there are many different people who have many different opinions on what is meant by these programs.

But what I do know is that the Democrats want a government plan, where the government will take over health care. They want to cut Medicare in order to pay for that plan, even though Medicare has $39 trillion in unfunded liability. They want to -- to do a number of things that -- that I find objectionable, such as an employer mandate, a job-killing employer mandate that hurts -- hurts people on the lower spectrum who really are low-income wage-earners.

They want to move, according to the Lewin Group, up to 119 million people into Medicaid. If that happens, it would destroy the -- the health insurance programs throughout the country. Eight of ten Americans really -- really want their health insurance coverage. They don't want to lose it.

In fact, 64 percent would prefer health insurance to the 19 percent who say that they would like a government plan where the federal government -- nameless, faceless bureaucrats -- set what the terms and conditions are of our health care system.

Having listened to Arlen, I have to say that I thought Arlen handled his town meetings very, very well. I disagree with Arlen that they're not representative of the American people. I think they are. I've found people just up in arms everywhere I've gone on health care.

On the other hand, I compliment Arlen for the way he handled it. He showed respect for the folks who were there. And, look, there are people on both sides who are attending those meetings. Don't think the unions don't have everybody they can get there, and the Democratic National Committee, they're encouraging people to get there, as well as, I'm sure, Republicans.

The important thing is, is that we handle it well. And I want to compliment Arlen on that.

TAPPER: Well, Senator Hatch, if I could just stick with you for a moment, in 2003, when you voted for a Medicare reform bill, part of that bill required a care management plan for a targeted beneficiary, which shall be developed with the beneficiary and shall include the following, the provision of information about hospice care, pain and palliative care, and end-of-life care.

If the government has no business telling the American people that they should engage in end-of-life consultations, as many in your party seem to think is the case, why did you support that?

HATCH: Well, every doctor that handles senior citizens -- and both my parents were 89 years of age when they died -- every doctor that handles those works with end-of-life care. I mean, we expect that.

But to -- but where people are concerned is that, with a government plan -- keep in mind, the Democrats want to have an IMAC. That's an Independent Medicare Advisory Council of five people appointed by the president who will determine what kind of health care you're going to have. And guess who they're going to have to ration? It's going to be senior citizens.

And senior citizens are naturally concerned about that. So am I. And I think that's where these type of things come about.

But when doctors give end-of-life care, I don't know any doctor who does that who doesn't do it as well as he can or she can.

TAPPER: Well, I think, actually -- I think IMAC is supposed to be recommendations and not determinative, but -- but moving on, Senator Specter...

HATCH: Well, that's what they want. Jake, that's what they want. That's what they're suggesting. That's what this administration is suggesting. In all honesty, I don't want a bunch of nameless, faceless bureaucrats setting health care for my -- for my aged citizens in Utah.

TAPPER: Senator Specter, is -- is Senator Hatch describing the health care bill properly?

SPECTER: No. Let me come back to the question that Senator Hatch didn't answer. You asked him, did he agree with Governor Palin or Senator Murkowski on the basic issue as to whether the plan provides for death councils. Senator Hatch didn't answer that.

The fact of the matter is that it's a myth. It's simply not true. There -- there are no death panels. And when Senator Hatch comes to his basic point, that this is a government takeover, that's simply not true, either.

The government option is an option, pure and simple, and the private sector will be maintained, and people will be able to keep their current health care plan if they like it. And the employers can be given incentives to stay with the plan that their employers like.

TAPPER: Well, Senator Specter, let me stick with you, because about that government plan, the public option, in May, you said you would oppose that. And you -- you have changed your mind and you -- at least as -- as I understand it, in town hall meetings, you're saying that you do support the inclusion of a public plan in a health care reform bill. What changed your mind?

SPECTER: Well, I really had only one question on a TV interview, and I gave a negative answer, but that was before -- listen, I don't want the kind of a bureaucracy that puts a gigantic bureau between the doctor and the patient, which some people have proposed, and I'm against that. And my negative answer really went to that.

That was before Senator Schumer, for example, has come out with some specifics on a government option. And the government option, according to his plan, is going to maintain a level playing field. And the option is not going to force out the private sector.

And I think competition is good. And it is just an option, one of many alternatives with a government option.

TAPPER: And, Senator Hatch, you were at the negotiating table in the Senate -- with the Senate Finance Committee members talking about a bipartisan solution. You walked away, saying you didn't think that a bipartisan solution, you could sign off on it.

But let me ask you a question, because obviously one of the big...

HATCH: No, that isn't what I said. That isn't what I said.

TAPPER: Well, tell me what -- tell me why you walked away.

HATCH: I still think -- I still think we should have a bipartisan solution, but what I can't tolerate is a government plan. And there's no way you can make it coequal, have a government be on an equal playing field, because -- because they have -- the government basically -- if we turn over this -- this country's health care to a government plan, and we open up a government plan, the Lewin Group, one of the best analytical groups in -- in health care in the country, if not the best, said that up to 119.1 million people would transfer from private insurance into the government plan.

TAPPER: Well, Senator -- Senator Hatch...

HATCH: If that happens...

TAPPER: ... we should point out, first of all, that the Lewin Group is owned by UnitedHealthcare, although they -- they insist...

(CROSSTALK)

HATCH: Fine. But they're still highly respected.

TAPPER: Yes, I'm not disputing that.

HATCH: They're highly respected.

TAPPER: But let me ask you a question. You are one of the chief co-sponsors of the State Children's Health Insurance Program, bringing health insurance through the government to millions of children. You've been heralded for that by liberals. At the time you introduced it, then-Senate Majority Leader Trent Lott accused you of creating big government. What's the difference between the SCHIP program on a theoretical basis, in terms of getting the government involved, and what you're now talking against?

HATCH: The way it was originally designed, it was the Hatch- Kennedy bill. We wrote it together. And I have to say that that plan basically provided block grants to the states for the states, according to their own demographics, to set up their own Children's Health Insurance Program. It worked amazingly well until -- until the liberals started to push more and more Medicaid -- more and more Medicaid people into the CHIP program and started to expand the CHIP program in ways that were never contemplated.

We did CHIP for the only -- for the kids -- the only kids left out of the health care system, children of the working poor. Now it's being used to push Medicaid people into it. And everything the Democrats are doing is pushing towards what's called a single-payer system, where the government basically controls everything. And this public plan, this public government plan, don't think for a minute that that will not destroy the current insurance system.

Eight out of ten Americans are basically pleased with the -- with their health care insurance. They'd like to improve it. They'd like to make sure that they have guaranteed issue and that people with pre- existing health care problems are taken care of. And we all want to do that.

And 64 percent of them say they'd prefer that over a government plan. And yet we're just pushing like mad to get a government plan here.

TAPPER: Seventy-nine percent of the American people do say, though, that their premiums are too high, they pay too much.

HATCH: Well, we all agree with that.

TAPPER: We only have a -- we only have a couple minutes...

HATCH: We all agree with that.

TAPPER: We only have a couple minutes left. I want to get both of you to weigh in. What needs to be done to contain health care costs, Senator Specter? What tangible things need to be done to bring costs down?

SPECTER: Just an introductory comment, with Orrin's filibuster. I would use this program to invite Senator Hatch back to the bargaining table, back to bipartisanship. Senator Hatch is a very smart, experienced fellow. I've worked with him for a long time.

Directly answering your question, what can we do to bring down costs? Many things. First, National Institute of Health Research, which I have pushed, cuts down on the mortality in many lives. Secondly, examinations, early detection on cancer. I was the beneficiary of early detection on cancer, which has solved my problem.

But, third of all, having a doctor examine so that you don't get involved in chronic ailments, which are so debilitating. Next, there ought to be criminal prosecutions that result in jail sentences, not just a fine on Medicare or Medicaid fraud.

TAPPER: And, Senator Specter, I...

SPECTER: And also the...

TAPPER: I have to interrupt you. I'm sorry. We only have a minute left...

SPECTER: OK.

TAPPER: ... but I want to see if Senator Hatch will take you up on your offer to come back to the bargaining table before we go. Senator Hatch?

SPECTER: I want to see, too.

TAPPER: Do you want to -- do you want to go back to the bargaining table and make this bill better?

HATCH: I'm always ready to go back to the bargaining table. Heck, I've probably helped pass more bipartisan health care legislation than anybody I know, Hatch-Waxman, Hatch-Dodd, Hatch- Kennedy. You know, we've just had one bill after another, and they work. And the main reason they work is because we rely a lot on the states.

Utah is not Massachusetts. We don't want the Massachusetts plan imposed on Utah. Massachusetts is not Utah.

TAPPER: I have to cut you off there, Senator, but we look...

HATCH: So I would make it work...

TAPPER: ... but we look forward -- we look forward to you joining the bipartisan conversation. That's what we do here at ABC. We bring people together.

Senator Specter, Senator Hatch...

HATCH: That's great.

TAPPER: ... thanks so much for joining us. We really appreciate it.

SPECTER: Jake, that's -- Jake, that's -- that's your answer. Bring Senator Hatch back.

TAPPER: OK.

SPECTER: We'll have some bipartisanship and solutions.

HATCH: Well, I'll try to get back, if they'll open it up and (inaudible)

TAPPER: All right. Thanks to both of you.