good morning. america's health care debate new evidence today to support for the president's reform plan is slipping. we'll treat the country's economic illness with a "squawk box" summit. earnings central continues quarterly reports from two dow components. travelers. really? oh, yeah, theater. and exxon mobil and the markets at this hour, green arrows across europe and asia, u.s. equity futures pointing to a positive start at home here as "squawk box" begins right now. ♪ i want a new drug one that won't make me sick one that won't make me crash my car ♪ >> good morning, everybody. welcome to "squawk box" right here on cnbc.

i'm becky quick along with joe kernen and carl quintanilla. we have quite a show in store for you today. social security social security may be called the third rail of the american politics system, but no issue has stirred more debate or more passionate arguments than health care reform education and what's been happening in washington right now. today, we are tackling the issue that everyone is talking about in a way that only "squawk box" can. we'll have the problem, the proposals and what it all means for your pocketbook. america's health care crisis, a squawk summit begins at 12:00 a.m. eastern today. and our guest lists include former vermont governor and dnc chairman howard dean and former senate majority leader bill frist. plus from two different parties, we've got two different administrations. donna shalala and the man who served in that same position for george w. push, tommy thompson.

we have republican senator judd gregg and john yarmuth. corporate america is a big piece of this organization and we'll be joining by billy tauzin, the ceos of cvs, walgreen and tenet health care. we'll have the federation of american hospitals and one of the nation's leading audiologists is going to be making a house call. and travelers, one of the major companies coming out today, dow component reporting as we're talking. >> it is. and i've got an operating share of $1.25. i don't know how that compares to expectations. trying to get this thing to change the screen from sprint nextel yesterday. >> i'm waiting on it, too. >> not cooperating. there's something wrong here. >> 1.25 versus a $1.28. >> and what about for the year? >> '09 operating $4.80 to $5.05.

>> $5.17. >> so that looks below there. consolidated gap riesho of 9.72. these metrics are a lot different with a pnc insurer for what to pay attention to as i so look at the estimates for sprint nextel, travelers at this point, no indication. it was a $42.63 close. $25 billion market cap. this is one of the recent additions to the dow after some came out. >> let's go straight to the squawk news line for reaction. mike nanizi joins us on the phone. mike, did i get your name right? >> yep, you did. >> i want to make sure i did. good. at least on the bottom line this quarter, are they coming in below the street's view for the year? >> well, i think a couple of things to take into

consideration. first of all, travelers tends to not include reserve releases in their numbers. so most of the street, most of us analysts include a provision for relerve releases. the second thing iat their meeting, they came in -- >> coming in below consensus. >> that's right. so reserve, for example, i'll give you an example in the first quarter. the company had about $250 billion of releases in the third quarter. as it comes out, they'll recognize it, but they don't forecast it. on the street, we try to take into consideration what we think their reserves might do in the quarter. that usually represents some difference between the company's guidance and how the street

estimates. >> catastrophe losses, $130 million after tax. it was higher in the prior year, right? >> yes. so prior year second quarter -- prior to year second quarter was about $350 million? >> yeah. >> so we were looking at about 146 just in terms of our estimate that's just a number that we had come up on based on their guidance and some weather items. that seems about right. that seems in line. >> let's talk about the net investment income for the fixed income portfolio. $572 million after tax in the current quarter. is that something that comes as a surprise or we knew what was happening in the markets? >> well, i think what happens there, if you look at their portfolio, travelers are a very conservative portfolio. when we looked at analytics last

year, for example, we estimated the pnc companies overall lost about 7% of their portfolio. insurance companies overall about the% of their port to the followos and travels about 9%. so the company isn't probably going to get as much of a bounce on the portfolio side as maybe other companies that took more of the pain last year. on the investment side, a lot of that reflects a larger allocation towards short-term and cash investments, just being more defensive. >> people have been talking about a very mild increase in pricing for the industry. is that true? and is it true in travelers' case? >> they write so many lines and i think pricing depends by line. so in the personalized segment, they've talked about minor price increases as of late. i'm not sure, on the commercial side, you've seen some talk of price increases.

there has been a slew of companies that reported recently where prices seem to be xrofing but still either negative or close to zero. so that is something that we'll continue to watch. i mean, i think for a company like travelers, the reasonable we like it is not necessarily because they're going to see a lot of pricing improvement, but we think there's some potentially positive trends on the loss side. for example, as you know, when you get car insurance, you pay today for the activity that the insurance companies expect in the future. and so if people are driving less because they have less jobs or because they're buying less things, less trips to the store, then they're going to have fewer accidents. this is a trend that doesn't play out in a quarter or two but could play out in the long run. >> let me tell you quickly, a few things they're talking about, cap losses of $630 million pretax, $410 million after tax or 73 cents per diluted share for the year.

they see no year development favorable or unfavorable. no significant changes in private equity hedge fund valuations. no significant changes in average invested assets. if you take all that into account, what do you think just in terms of what the knee jerk reaction is to this report? >> you know, honestly, becky, the report hit two minutes before i came on. so i haven't had a chance to go through and crunch the numbers. so i mean, as i was saying on the reserve development, the company always guides. it took $250 million of reserve development or roughly $4.49 million. that's the way that they guide. so i need a little bit more time to try and give you a good feel for kind of how we think the numbers look wholistically.

but i mean, our number was $1.28. they came in with consensus, which is about a penny short of our number. >> and you're looking for a target of 42, perhaps? >> yeah, that's right. >> the way i think about price target, i mean, i think book value is a number that we look closely at and so that is around our estimate for year-end book value next year. so that is how we come to our price target. as i was kind of saying before, i mean, you look at quarter over quarter changes. for companies that have business cycles as long as insurance companies, it's hard to say, you know, when the pennies come in this quarter and next quarter, but over time, i think you want to focus on a froiz with value and some recognition. and i think just one quick point on the dow inclusion, i think

it's important, i talked about personalize. i think the red umbrella, the brand recognition, it's hard to say whether it will have a meaningful impact on stockholders and distribution, but it should have some impact on helping to get the brand out there and get people to understand, especially as they're building out their direct, personalized business. >> it doesn't hurt to be a dow component as opposed to not being one. mike, thanks for the insight today. >> okay. >> talk to you later. the latest news out of washington, house democrats reaching a deal saying they will cut the costs of health care overhaul. many small businesses would be exempt from having to provide health benefits to workers. the government would establish a public insurance plan to compete with private insurers. it would negotiate rates with health care providers. a full house vote could come in september, but judging from how things have gone the past few

weeks, joe, we'll see if even that happens. >> and we got thus new polls today. a new nbc/wall street journal poll. so even if you don't believe the journal, the nbc balances this out here, believe me. this morning, suggests support for president obama's health care plan is slipping, especially among those who have insurance. 42% of those surveyed call it a bad idea. 47% of people that have insurance called it a bad idea. 36% believe it's a good idea. if you polled those with private insurance it's 47%. then i look, there's a piece here in the journal. 91% of americans have health insurance. and 84% of those people are happy. so if you just do the math, 76% of all americans are going to say, how is this going to affect me? and by a two to one margin, americans want price sector

coverage versus a public plan by two to one. so how the we can do you sell this things? >> it's not just the nbc poll. >> when you ask americans how concerned they are, the dwaul of your own health care will get worse. in july, 41% of americans said they were very concerned versus 28% back in june. >> if there's any way those two organizations would have skewed it differently, they would have. so i will believe that number because they -- >> the president had a good point yesterday. he's getting letters from people saying, mrooet please, don't mess with this. don't touch my medicare which sa government program that most people are actually very happy with, which is a good argument. it's one of the few arguments they have left.

>> and the seniors, their members pulled back out of it. >> well, when you look at what needs to be done, that is where they're going to ring all the seniors out. so if suddenly you cover everyone in medicare or they get a lot more coverage, analysts say we're going to ring a lot of costs out of medicare, they think their coverage is going to change. but david walker, when he comes in here, what is his main concern about ballooning problems that he has in the futures? if you're going to triple the people that are in it -- well, medicare is ballooning. >> i think the question becomes is there something that can be done without ail lean nating every group on this because obviously we have a problem. >> it's not an visit problem, for the most part. most people are happy. how do you go people who are happy with their own situation

that to make a move overall? >> we talked about it the other day. what are we trying to do, cover everyone or hold down costs? >> we may have to do one or the other. >> it's going to be expensive. >> david walker and others who have come in here say fix it first. >> we have governor dean coming on. he just says stop the arguing. go to reconciliation. we're pushing this through and we're going to fix it. we'll see if he still feels that way. you have to take your medicine, you 84%. >> well, if they do that, they may have to pay the piper in about 15 months. >> people say social security is the third rail but this affects everybody. we'll talk more about it. >> in the meantime, futures this morning are -- let's see, asia had a pretty good night overnight. europe had a pretty good night. you see some of the earnings out

of europe, bp, alcatel, volkswagen, royal touch all beat expectations. it took us seven sessions wab joe, to get from 52 to 48. >> that was a big drop yesterday. >> ten-year note, we continue to watch the options yesterday and the five i don't think was that oul hot, either. >> which means today you get another auction of the seven year and people will be watching that very, very closely. >> and some signs, perhaps, that the chinese in conjunction with the strategic economic dialogue must have been holding bids earlier in the week. there is a look at the dollar.

and here is gold, which has given up a few over the past couple of days. overseas, christine tan is in singapore and first let's check in with london and get a handle on some of those earnings with steve sedgwick. steve, good morning. >> good morning to you. a lot of numbers hitting the wires including astrazeneca. they've come in with blockbuster numbers. they've beaten the street by a long way. second quarter core eps figures as opposed to expectations of 1.4137 crestor is a stat. 30% plus increase in sales of this drug. that means total sales of this company,ed $7.59 billion. royal dutch shell, one of the top five oil companies in the globe, 70% dedecline in their figures. yet analysts are saying these

are blowout numbers and that's the environment we're in at the moment. renault, siemens, and this one is important because it's the world's largest chemicals company. it is currently trading, as you can see, down 4.4%. i just want to tell you what their chief financial officer said. he said we see no signs of a sustained upturn despite stabilization at the lower levels. out to christine in singapore. >> hey, steve. asian markets mostly higher today. investors jumped in to do bargain hunting. ed with we had china's government saying they would use sustainable growth to support the recovery. that helped to support the shanghai market. still, lots of questions about whether there is more correction to go as the market has risen more than 70% this year.

over in hong kong, stamging a late recovery and gains were capped ahead of next week's corporate earnings. in japan, the nikkei rose to 4.5% in highest close in months. sony closing up more than 6% ahead of earnings after the bell. so that is it coming from asia. >> oh, yeah. sorry, christine. >> we're trying to solve the world's problems back here. major arguments. christine, thank you very much. >> we were agreeing? i thought we were disagreeing. >> no. we were agreeing on that. that's very important. >> we have bift frist come on and he gets a lot of mail. howard is your favorite. he generates more mail than anyone that we get on. >> we're just saying people who have very strong opinions and who are going to draw people out of the woodwork -- >> everyone but -- actually, everyone but me is polarizing to the viewers.

i'm universally reviled. >> everybody loves joe. joe's world. >> all right. >> let's get to our thursday task force. mark, we've got some numbers coming up today. those job ms claims at 8:30. weekly jobless claims have been very important. what should we be watching this time around? >> well, we had some claims early this month that had to the with the timing of the auto shutdown. we're expecting that number to come back up a little bit. the numbers that we get today, the continualing claims cover some of the survey period for the july employment report and we've got enough data to take an early look at that. right now, it looks like we're going to have a decline of around $300,000 jobs and possibly a 1% drop in the unemployment rate. >> allan, we've been watching these numbers that have come insofar. what we've heard from europe has been pretty good numbers.

a lot of these companies have gotten to better than expected costs. what's your take? >> i think that we've seen earnings, overall corporate earnings so far in the second quarter step over a very low bar. i think roughly 75% or more of the companies are beating greatly reduced expectations. you're right, i think the stock market has been encouraged by the fact that companies have been aggressively cutting costs and that's been good at shoring up margins and the like. i think we're in a period of transition where we need to see less cost savings and more revenue growth. and i think that's where the concerns that are floating out there about whether or not the market is over dodone, it's tha transition period. how much second half strength

will we get and how is that going to translate into top line growth. >> allan, it's been interesting that the bears haven't been able to capitalize on any of those concerns and it's close to a month that you're talking about the bulls being in control of this market. >> well, that's right. that ended up not being realized and the reaction to that was to take the market higher. i think the s&p 500 with two trading days left in july is up about 6%. i am cautiously optimistic on stocks. i've been adding to equities in my asset allocation portfolio since mid march. so i do think the economy is turning the corner. it is turning the corner into the wind. but i think overall, with valuations, this market is not necessarily overdone. >> when you say cautiously optimistic, does that mean if you start to see some sort of a

pullback that lasts several days, that you would change your mind on this and go the other way? >> i think that -- let me put it this way. we don't expect that to happen. i think we're in a period of consolidation and we're in a period of savings to revenue growth. so if we find something in particular that causes us to suggest that the economy is going back into a downturn, we think we could go into the fourth quarter with a little bit of momentum. >> you know, mark, we were talking earlier about the treasury auctions over the last two days. they've been disappointing by just about every account. the five-year auction yesterday, the two-year auction the day before, when you start looking at lower than expected demand for u.s. treasuries, what does that mean to the models when you start figuring out how we're

going to be paying back a lot of this money over the next one to five years? >> i think part of that is in reaction to what we've seen in the stock market. the appetite for risk has increased and so there's not as much demand for risk-free assets. rates are still incredibly low. and so given what we've seen in the stock market and what we've seen in stock markets around the worl, i just think the appetite for low returning risk-free assets isn't as great as it used to be. >> all right. mark, allan, gentlemen, thank you very much. it's always good to talk to you. >> thanks. when we come back this morning, the cash for clunkers program has cars flying off the lots across the country. could more government funding be in the cards? when we see the dealers that are registering for this think so thing are lining up online. when we come back, we'll talk about that. in the meantime, here is a loot yesterday's winners & losers. ÷

that cash for clunkers fund sg disappearing quickly. the detroit news reports more than 10% of the $1 billion allotted has been claimed in the

program's first three official days. some michigan representatives are calling on the government to add more funding to the program. the program is currently scheduled to expire in november or when the money runs out. it's not a bad deal. 4,500, maybe 3,500 for your car. >> and like i said, i've been getting mail at home for the dealers or gearing up and ramping up for this, which makes me want a new car, too. >> interesting piece here. on the possibility of an auto industry, come back, no one thinks is going to be that strong and maybe it's possible. >> beyond just sort of the restocking of cars on the lot? >> if we were to get anywhere near 15 million units by 2012 the company like ford would clean up at this point and what is a chivalis? >> what?é >> the chivalis that we can't compete against foreign manufacturers, tinnestble dominance of japan. it's a myth because toyota is

losing a lot of money, too. >> nissan yesterday. >> right. if you give people what they want and it's -- you know, and it doesn't break down, it's not a lemon, it could happen. i mean, maybe you could see the auto industry come back. have you made a decision? >> i will let you know when i have an actual -- no, i mean, there's things happening but we don't endorse things. >> no, no. >> we own things. >> if you're a human being and -- >> i have an interest in supporting the u.s. i do. but i'm not -- i don't want to support government motors that much. there may be a little bit of that in a lot of people where

you're worried congress owns -- so maybe you go with the fleet. >> i have a ford. >> becky has bought american for a long time. >> i mean, the car is not for me, anyway. it's for my wife. no, but i mean, i want the safest possible five star -- i would like one big inflated hummer covered with -- pillows. >> yes, if i could. now i'm worried about these tech temperatures. you've got to stop texting. 23 times. >> did you read about the truckers who are doing this, too? i said from now on, we've got to load by example. nobody is allowed to text on our show. >> 5 seconds, you look away for five seconds, one of those semis covers a couple of football fields in five seconds. >> yeah. and that's just -- >> and by the time you look up, you know, those smart cars, you've run over four of them. and you turn on the windshield wiper, you know? >> anyway, coming up, we will have more on this morning's top

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call 1-800-skymiles to apply. this is the official card... of the world's largest airline. good morning. welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and carl quintanilla. the dow is hitting right now. talking about dow chemical, and they posted a profit, which is surprising. >> posted a profit when you strip out items and look at

discontinuing operations. and the machine just went away again. why does it do that? but anyway, they talk about a nickel versus the loss of 8 cents which was expected. they say there's a lot of things happening here. management stepped up cost interventions. the.can was able to maintain prices from the prior quarter so all of these things helped out more than the street had been expecting. >> revenue is way below, though. 1.3% versus 13 estimate. so this is -- >> so again, you're talking about companies that are not making it on the top line, but are managing to beat on the bottom line. andrew liveris, who has always been out in front talking about what he's seen from the broader economy have very broad measures of ways of looking at things. he says the economic outlook for the rest of 2009 appears to be stabilizing. he also says the united states economy has found a bottom. that's a bold call from a

company that has faced a lot of turmoil. >> and the prooi price, i guess their pricing was down 20% versus the same period last year on a proform ya -- >> sequentially, they said they could maintain price cuts. they had the high profile cost cuts that came through. and remember, we talked to him about this, liveris, when he was on maybe six months ago or something, we talked about the price cuts and the push backs he was saying said, wait a second, you can't put these prices on to us. well, this stock looked into the abyss. >> they wanted to byro man haas and then they didn't want to buy it. >> right. and they paid a lot more than it was worth at the time that they announced it. and the stock got down to 5, under 6, and now it's over 20. >> so does dow have their mojo back? >> well, they have a lot more

mojo than they had at 5 or 6, but look where it came from. but it's amazing what we've seen in the last five or six months with many stocks. ge is one that comes to mind that was $40. upgraded today, and not just by anyone, but by goldman sachs. goldman sachs upgrading the stock to buy from neutral. barney frank controlling ge stock right now, carl. hope you're comfortable with that. >> chairman frank is a powerful man. we know this. >> barney frank indicating that regulatory reform would not force the separation of ge capital necessarily. that's summarizing it with the thoughts, i guess, of goldman

sachs. target of 15? >> target of 15. >> please, barney! we have to kiss up to barney now. i'm going to think twice the next time he's on. how do you do it, chairman frank? >> does it ever get old? >> does it ever got old being so you? >> yeah. >> i found the rest of these comments versus the bottom. he says the economic outlook is stabilizeding because of stronger growth where you expect it. asia pacific especially china where stimulus programs have been creating demand. he also says the united states has found a bottom, but will be slow recovering. therefore, the 2009 does not expect any improvements or remainder of market conditions for the remainder of the year. >> let's get to dave ba lovic. you never know what's going to happen when we do that. that's why we love him. another dow chemical revenue is weak, with you calling for the

bottom has been reached. according to someone you should know. that is a commodity type chemical company, dave. >> that he had a good quarter. looks like we're into cost cutting again and revenues and i think you'll agree, joe, revenues means growth to me. we're seeing bottom line stuff, but we're not seeing the revenues that are going to create the growth. one of the concerns here that we have in the marketplace is the new normal of unemployment at 10% and how the economy and how society is going to react around that number. >> yeah. that's bad because, you know, you are looking for growth and you say it's a good quarter, but obviously, it's a quarter that compared to normalized earnings a couple of years ago, it's way down from that. and as weak as things are and as bad as the employment aushgzs are, is it too soon to say people are going to want more

yield? that's not going to work because we've got to buy more stuff. >> i think it's an unfair comparative of thee years ago. before you accepted to me, you made a comment of what we've been through in the last 12 months for dow to be alive and stay in the game. like anybody else out here, that's a win. the more quarters you can put back to back like that and continue to get stronger as you go, hopefully we'll see the dow of old. you've seen the yield curve in the bond market help the seblther. you see some appetite coming back in the bond market. one thing that we did note here the last couple of days is as equities are rallying, so is the vix. that is telling me that something is going on here. either we're buying insurance or

we need to bring this area back down. crude oil, also, i can't believe anybody is really surprised at what's going on here. we've got 20-year highs as far as supply is concerned and seasonal lows from a refining production standpoint, capacity utilization at 85%? it's obviously to me that the price for crude oil needs to be maintained to make globalization work. as far as speculators were concerned, it's not reflecting the physicals and trading the fundamentals. so it is what it is. >> wait a minute. so i've got a guy that is on the floor in chicago saying that speculators are gaming the system? >> no. i'm saying they're trading the system and it's about price discovery and liquidity. i'm saying if you've got -- you're an ohio guy, right, joe? i'm a pennsylvania guy. we're not close -- >> well, cincinnati.

let's make that clear. >> pennsy-tucky, then. one of the companies that i worked for for a while was marathon. the marathon brand, speedway, bonded, gastown, starvin marvin, ashland, and i probably missed a few are either howholly owned subsidiaries of this company. to me, i think we need to go back to a trust as opposed to speculators in the marketplace. the more transparency, the better. >> i knew it wasn't your guys' fault. it's big oil. >> we're mechanics, joe. we're mechanics. >> an nbc poll is out this

morning and no surprise, health care is a major headline. john harwood has the information this morning. the classic right direction/wrong direction has flipped from june, right? june, right direction was 39 and the overall approval rating has gone down. how much of this do you think is related to the health care push? >> well, i think it's to some degree less about health care than if you look at some of the other questions in the poll about concerns over spending and the deficit. i think one of the things we're seeing in the health care debate is that the president is paying some price in public opinion right now for that $800 billion stimulus package. which whether or not it's effective and working right nor or going to work in the long run has em blasenned on people's

minds the idea that this guy is spending a lot of money. then when you get to the health care debate and people start throwing around $1 trillion over ten years, a lot of voter res sitting back and saying, yikes, can we afford this? and that's causing the president to take on some water in this debate. he's still in fairly solid shape in terms of his personal approval. people like the guy. they want to give him some room to operate. but this is a difficult moment and he has to sort of fight through it with his communications. >> you point out a pivotal moment. but decides approval ves jumped. and you mentioned health care specifically. handling of health care reform, approval -- you're judging here now now from june of this year, but where clinton was in 1994. are these apples to apples in

terms of how far along the push was? >> well, no, because the push is much, much further along than it ever was with bill clinton. they began the legislative process earlier. they're actually making more progress. one of the sort of microbenefits in the moment we're in right now is that expectations all of a sudden got to that a year ago. now that you have the blue dogs and the finance committee making progress, they say, oh, wow, forward movement on health care. they're hope, the democrats are to get something through the finance committee in the senate next week and that may give some momentum boost where people thought the president was losing the argument. >> you didn't think that. you told me pelosi had the votes wore or three days ago. >> no, no, i do think she did

have the votes. >> who do you think didn't have the votes? >> pa lossy will have the votes in the house. trust me, the question is, when that happens -- and when i talk to peter last night, we were at a focus group outside baltimore to give more depths to the numbers in this poll. a lot of concern among people about speed and the whole thing, are they passing a bill they haven't read? one thing you heard barack obama say yesterday, they feel they achieved something by slowing the process down over august so they can go and tell their constituents we're reading the bill, there's a bit of pr involved there. >> so you don't believe, as boehner says, that if this bill hangs out there over the august recess, my guess is it will be shredded? >> that is possible.

when you have a big piece of controversial legislation, the more exposure you have when people are back home, the more water it takes on. what boehner is expressing is the conventional calculation. it is somewhat different this time in the reform forces have more money, they're more organized. you have some of the business players like the insurance company out there. the ahip, american association of insurance plans is running positive ads saying we're for reform. so it's a bit of a different environment. >> let me ask you this, john. the deal the blue dog arrived at, there's a lot of people who say they pulled back on a lot of stuff for small businesses and it's losing some of its bite to the far left. is there a chance that the far left finally, that you lose those guys because it becomes too watered down? >> i doubt it.

some of them are threatening that. i think that is mostly empty talk. look, the far left knows that people have been trying for decades to get national health reform. henry waxman said yesterday, failure is not an option and i think that is the govern b principal mun those in the white house and democrats right now. even if the far left has to say, oh, man, we don't have the employer mandate, instead we have subsidies from businesses to cover the subsidies for their workers who can't afford health insurance, i suspect at the end of the day when it comes down t votes, nancy pelosi and ted kennedy will go to those liberals sxhs, you have to vote for this. this is our shot. >> two quick numbers here, john. the concerns about health care versus concerns about deficit spending, deficit wins out. 17% for deficit government spending in terms of what should be the government's top

priority. health care only get 14%. the second and third line of that -- >> the deficit, carl southbound is driving a lot of the concern right now especially among independent voters and that's something that the obama administration has to watch. it's one of the reasons they staged the big fight over the f-22 yesterday. they got a big win there. what you see is tremendous concern about jobs. job creation is the number one concern. but should the congress and the president pay more attention to stimulating the economy or controlling the deficit? they say controlling the deficit even though they're concerned about jobs. lawmakers will have to work it out. i don't think it's likely. >> and of all the polls, this one was really insightful, i would say. >> always is. >> good to see you. talk to you soon. still to come this morning,

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this is a special presentation of "squawk box." america's health care crisis goes under the microscope. in the waiting room, former vermont governor, howard dean. former majority leader, senator bill frist. cbs care mark ceo tom ryan. senator judd gregg. the president of the federation of american hospitals and former health and human services secretary donna shalala. how an overhaul of america's health care system affects everything from company costs to a trip to the emergency room. who's paying for it? and what about consumer protection? these questions and more as our special "squawk box" summit, america's health care crisis begins now.

good wednesday morning. welcome back to "squawk" on cnbc. i'm carl quintanilla along with joe kernen and becky quick. europe's been doing pretty well on the back of some good solid corporate earnings from the likes of volkswagen and royal dush shell. some stories we're following, dow component travelers, $1.25  share was below estimates. the company upped the estimate for the fiscal year. its number is still below the street estimate. shares of astrazeneca, earning $1.64. the company raised its full year guidance and says its flu vaccine could be available by september. the ceo will sit down with mike huckman to talk about the results, the outlook and health care reform on "squawk on the street".

a new wall street journal report says president obama's health care plan support is slipping. 42% of those surveyed call it a bad idea. 36% believe it's a good idea. if you only poll those with private insurance the number calling it a bad idea rises to 47%. >> there you go. that brings us to the start of today's special "squawk" summit. we're tackling america's health care crisis and we're kicking things off within array of government leaders and past leaders. our guest host for the hour, dr. howard dean, former senate majority leader and medical doctor, bill frist, and former hhs secretary, donna shalala. you're president now, secretary shalala. are you secretary or are you -- i'd rather be president, but let's stick with secretary. i think we have to do, that right, or we'll confuse people. given what we're seeing now, do you feel any -- should we be

comparing this to what happened back in the '90s? is there any sense of deja vu when you look at some of these polls? >> well, certainly the issue of frightening those who have insurance was there in the 1990s. but i wouldn't overexaggerate what happened there to today because the situation is much worse in terms of health insurance. all of us who have good health insurance ought to be worried as more and more americans lose their health insurance. and as the system gets more and more inefficient. we have a long way to go in this debate, in this discussion. and i've got confidence in members of congress, both republicans and democrats, and thoughtful people. but we have to calm down because everybody's criticizing something that doesn't exist yet. what does exist is larger and larger numbers of people who can't afford health insurance and employers like myself who are overwhelmed with new health increases and can't keep up in

terms of salaries or providing first-class opportunities for our employees and for our students. >> governor dean? >> madame president -- didn't you always want to be called madame president. >> we'll go with that. >> one of the things in the poll that hasn't been talked about is that when you actually explain to the people you're questioning in the poll what this plan does, a clear majority supports the plan. the question i have for you is, the president behind the eight-ball in getting the message out about what this plan really does? >> well, there's a lot of noise out there. there's no question about that. i think the president is explaining it pretty well, but there are a lot of people adding to the confusion. the most important thing is that all of us understand that the status quo is not acceptable. in fact, quite dangerous. for those of us that want to make sure that everybody has good health in this country. so i think he's doing a good job, but i think there's a lot of noise out there.

we all have to be consistent in our message. it's absolutely necessary this year that we get the kind of reform that will give every american an opportunity to good -- to have good health. it's not just insurance. it's the opportunity for good health and protection for their families. >> i guess nominally on the other side, but you don't necessarily a public plan is out of the question. you want the states to be involved? >> a couple things. i think donna shalala is exactly right. this is not 1993. things are very different, in large part because you have support of the pharmaceutical industry, hospital industry, of the physicians that the system not working in an efficient way. there's a lot of waste that goes on. it costs too much. and they've all been out and say, we support reform. that's very different from 1993. one of the big issues is the one you brought up, the public plan. the public plan has been put on the table by the democratic leadership and by the president

of the united states. and it has lost support. the united states senate, my colleagues in a bipartisan way, have pretty much thrown the public plan out as fashioned by the president. that's the nationalized single payor medicare like plan. yes, you do have to have a backstop, but let's do it with local cooperatives. it could be state regulated where it has a lot more local control instead of this single -- national single payor type control. that seems to have a lot of support. i bet president obama comes around and says, that's pretty reasonable. it may be a compromise. but the public plan scares too, too many people. >> governor dean says it's a waste of time without a -- right, governor? i'm not going to say it for it, but even the senate, you say the kent conrad proposal for co-op, there's another proposal that

might be better? >> the health education labor pension committee has a much more mainstream plan. 72% of the americans believe a public plan is a good idea in that they ought to have the choice. i think the rebellion among the american people is, wait, why don't we get the choice? everybody over 65 has one. there's two plans in the senate. it's not clear the senate finance plan has the support to even get out of senate finance committee. i think you need a public plan -- a public option for people to decide on. >> you would acknowledge that if, in fact, it ends up, co-ops the white house will have to come out in favor of that, right? >> i hope not. co-opens aren't going to work. >> the white house hasn't ruled it out. >> they haven't ruled out anything. here's the problem with co-ops. we already tried co-ops. it was called blue cross blue shield and they got eaten alive. more than half are private insurance companies. for profit. this co-op stuff is -- here's

the problem with what's going on in the senate finance committee. what they're looking at is a political solution, not a policy solution. the other two plans that are out there, the house plan and the health, education and labor plan are solid, thoughtful, well put together plan. the blue dogs helped the house plan yesterday. they made it a better plan. but the senate finance is adrift and they're not talking about policy, they're talking about politics. >> others argue finance is operating in the context of an economy that's in trouble, that doesn't have the money we thought we did 12 months ago, and is having to do as much of an ambitious agenda as they can with a limited budget. >> quet is -- >> co-ops are not taxpayer subsidized, self-sustaining. if i'm a small business owner, i can buy in. isn't that the definition of reform -- >> no, you can buy into insurance now. co-ops do nothing to reduce cost. zipppo. they'll get too small, in small

states the cost will be tiny. they won't have any influence on the market whatsoever. you need a public option so the public can choose to get better consumer protection. >> but the question that comes back to that, governor, is there is a public option, does that, in turn, put the private companies out of business so that the public option becomes the only option? >> the only people who. -l put the private companies out of business is the private companies themselves. listen, they kick you off your insurance if you get sick with fine print, they don't let you in if you are already sick. if you have a family member you can't get insurance. their cost has gone up 2 1/2 times the rate of inflation. doctors and patients hate them. give folks the choice. that will clean up the insurance industry. they will put themselves out of business if they don't behave better. there's nothing to make them behave better other than a public option that people can choose. if people don't like the public option, they can go back to the private option. >> there's articles today, governor, the whole industry has already agreed not to exclude people anymore without any

reform. >> that's a step in the right direction. that doesn't control costs. it doesn't deal with the -- >> but the cbo would say the whole plan doesn't control cost the way it was supposed to. >> yeah, but what's going to happen ultimately is the public plan, which is modelled after medicare, their costs go up a lot less fast. they go up a lot less fast than -- look, with private sector plans, it's a publicly owned company. you have to satisfy the shareholders. all that money comes into premium dollars and does not end up in health care. >> governor, you i think they'll go -- they'll do it this way no matter what. leader frist, do you -- i mean, it's that way or the highway? is it going to be that way? >> first of all, dr. dean, you will say, is -- >> dr. frist. >> that's right. basically he really believes -- has all this faith in the house plan. i think the bipartisan, experienced senate finance committee, the senate itself is going to develop a better plan. he just thinks the shouse a better plan.

i think the senate is. at the end of the day, it doesn't matter, they need 50% of the votes over there, and they have 85 votes they can afford to give away so the house will write something. they may even -- the committee may pass something this week. i think that's going to be dangerous to the democrats because if that plan hangs out there over august, it's going to get hit hard. i think the bipartisan chuck grassley/max baucus will put together a better plan today. that's my belief. at the end of the day, i hope the president and majority leader reid does not cram this through on reconciliation. it's 50-vote threshold -- >> we need someone to break the dead lock. madame president, which way do you think it finally happens and what should we do here? >> oh, it will -- it will probably end up somewhere in the middle. i think we have to keep our eye on the ball. a lot of this is inside baseball.

we know two things. number one, large numbers of americans over 48 million now do not have any health insurance. so public plan, private plan, they would like a plan. that they could afford. second, we know we have to reform the way in which we deliver medicine. we're paying now on the basis of volume. it's inefficient. it's a system that we can't afford any longer. and it doesn't necessarily provide first-class health care. so the delivery system itself has to change. >> madame -- >> people have to have access to good health care. we have to have good primary care and prevention for everyone. it has to be a seamless system. but more than anything else, we have to pay on the base of value, not on the basis of volume. and i think the president's moving in the right direction. he hasn't made all of his choices yet. i believe congress is moving in good faith, both on the house side and on the senate side.

what we have to do is stay calm and not kill this thing by creating fear across the country. but expect our elected officials to have a thoughtful discussion, with our input. >> madame secretary, there are those who argue that what you're saying is true but when you're dealing with health insurance, you're dealing with a classic nimby problem is that is, if you're happy with your own care, you may empathize, sympathize, but you'll vote in your own interest. don't you agree the president is now operating from an extremely defensive stance? would you agree with that? >> no, i wouldn't agree with that. i think there is a lot of fear mongering going on out there. while people who work, who are provided good health insurance, like what they have, they have to understand, they're not going to be able to keep what they have. i'm about to communicate with my own employees. it's too expensive for us to

provide that kind of health insurance if it's going to go up double digits every year. that's their wages. you're going to be -- >> and you're going to be communicating that to your employees meaning -- but you'll be -- >> i'm going to communicate to my employees exactly what's happening. >> they're going to be looking at facing cuts in their plan? >> i have 11,000 employees and they have to understand that the way in which the health insurance system is now designed for them, means double-digit increases for us, for them and for the university every year. we can't afford those double-digit increases. we certainly can't afford it in the middle of an economic crisis. and we're going to have to reorganize the health care system, not only at the university but more importantly, across the country in a way in which they get very good outcomes. they have some choice, but simultaneously we're able to afford it. that doesn't impact on their wages and on other things they want from their employees.

>> before we let everyone go, i have a couple of doctor/policymakers here. dr. frist, we get a lot of e-mail we don't talk about tort reform anymore. tons of them. as a doctor, you're the guy that get effected most by, i guess, you know, by lawsuits maybe that make it -- make insurance expensive for you and make it difficult to do your job. >> doctors run unnecessary and expensive tests to cover their malpractice exposure. is there anything -- >> yeah, i think -- i think it needs to be talked about. first of all, there's good stuff in these bills that hasn't been talked about. the move toward value not just volume, which the secretary mentioned. the information technology of empowering people so they can make smart decisions when they buy their health insurance, which they can't today. preventing insurance companies from cherry-picking to ensure you're not kicked off these

plans. a good thing that's not in the bill at all is tort reform. as a physician, there is no question in my mind that there's a lot of excessive testing done, repeating tests done to protect me from a lawsuit when i know, no matter who you are in america today, with almost absolute certainty, if you, are a doctor, is going to be sued. that's where we are today. that drives up health care costs. i don't think in the big scheme of things it's going to save a lot of money f that's what you're looking for, but it will allow for higher, more effective care to be delivered. it's not as big a problem as maybe you hear from all the letters that are coming in. it's not going to really shift the cost curve but it is going to make health care less expensive if you had tort reform. the president refuses to put it in there. the house democrat bill refuses to put it in there and the senate bill won't be in there either. >> i'm going to say good-bye to leader frist and madame

secretary shalala. great having you on. that was a nice reason to debate. >> no fisticuffs. >> you looked right at me and you said -- you were looking -- >> you can't see anybody when you're looking at the camera. >> you were looking at me when you said -- >> well, if the shoe fits. >> have you been in -- you've been around lawyers so much with -- >> this is very interesting -- >> -- in politics you forget what it's like to be a doctor, no tort reform? >> i know why the president didn't put in. you make more enemies in a bill than you make friends no matter what you do. the more stuff you do in a bill the more enemies you make. >> what if it's the most important thing. >> it's not the most important thing. here's where i think it's important as a physician. first of all, i agree with senator frist there are fr privilege louse lawsuits. in a lot of states it's not a

huge problem, and some it never was, like mine. there are three specialties where it's a very big problem. anesthesiology, neurosurgery and ob. there are huge numbers of people who, a, will not deliver babies anymore, which is a big problem or, b, in places like florida where you have the laws where you can segregate your property and just go bare. that's not good for insurance either. this is probably not the right bill to deal with it. >> you'll be with us 40 more minutes or so? >> that's right. in fact f you have any comments or questions at home, if you want to weigh in on anything we've been talking about this morning, e-mail us at squawk at cnbc.com. we appreciate your comment. we're going through them and we'll try to get through as many as we can. it's not just health care we're focusing on this morning. we're awaiting jobless claim numbers. those come out in an hour and 15 minutes, closely watched by the street. we have that and earnings from dow component exxonmobil ahead.

up next, senator judd gregg on how to reduce skyrocketing health care bills. and the need to uproot the entire health care system when america's health care crisis continues. time now for today's aftlac trivia question. who was the first president to propose this a cabinet position be created to manage health care? you really need it these days. how come? well if you're hurt and can't work it pays you cash... yeah to help with everyday bills like gas, the mortgage... ...and groceries. it's like insurance for daily living. so...what's it called? uhhhhh aflaaac!!!! oh yeah! that's it! aflac. we've got you under our wing. a-a-a-aflaaac!

now the answer to today's aflac trivia question. who was the first u.s. president to propose that a cabinet position be created to manage health care? the answer, president harding, who proposed the department of education and welfare in 1923. i think to overhaul a whole system at a time like this when the chinese are worried about our currency is madness. they should improve things but overhaul the whole system? that's a much later day. i think it's madness really. our special summit on health care, crisis rolling on. joining us this morning from capitol hill, republican senator judd gregg from new hampshire. he's the senate budget committee ranking member. senator, thank you for joining us this morning. >> thank you. always a pleasure. thank you.

>> i'm not sure if you were able to listen in on the last discussion we were just having -- >> i did, yes. >> you did, okay. some of the big points that came to the table are, it seems that people on every side think something needs to be done. i know that you share that. you think reform has to come, too, correct? >> yes. i have a proposal which covers everyone and hopefully gets health care costs under control and doesn't do it by massively increasing the deblt of this country which is, unfortunately, what happens under the bills pending both from the kennedy document and the house. >> senator, it seems people come to the table and they look at two very different problems. one is the cost, the spiraling costs for health care. the other is the number of uninsured american. you're coming at this purely from the cost perspective, correct? >> no. actually, my proposal covers everyone. it creates -- it looks at the 47 million people uncovered and says, who are they? they aren't a home genius group. about 20 million of these folks have high income, $75,000 or

more, they just choose not to buy health insurance. those people should be given the option, basically they should be asked, to purchase health care which would be catastrophic coverage so that if they're seriously injured or they have a health event which is very severe, they aren't bankrupt and they don't end up, a major cost to the rest of the system. in addition, the other folks, 27 million who really can't afford health care coverage, can be picked up through a series of systems. in fact, about 10 million of those people already qualify for coverage under medicaid or s-chip. they could be covered. you have a large immigrant population you have to deal with. there are ways to do it without going to the government plan approach, which basically, in my opinion, creates price controls and probably drives up the debt of this country dramatically. >> governor dean, what's wrong with that plan? >> i don't think it will work. the private sectors have failed in terms of finance. their cost has gone up 2 1/2

times the rate of inflation. judd has been great, a wonderful neighbor, but we don't agree on politics. that is -- >> kind way to put it. i appreciate that, howard. >> well, it's true. you're very good to me, especially when i was first governor. my view is that the private health insurance system is broken. it's abused consumers, abused doctors, the costs are out of control and it's not going to get better. judd's plan essentially is to keep doing what we've been doing for 30 years and hope you get a different result. i don't think that's going to work. >> obviously, we do disagree, which is what this is all about. you know, governor dean comes from the view you should have a single payor plan like they have in canada or -- >> that's not so. i don't believe that. >> you're calling for a government plan which is essentially that. the government plan can only work, if it mirrors the private plan it's not going to control costs. fit not going to mirror a private plan it will put in place price controls and shift

costs as medicare and medicaid does to the private sector. as a practical matter, the effect will be that you'll lead to delays, lead to rationing, lead to government bureaucrats between you and your doctor and lead to a system where the government, by the scores we've seen from cbo, which is independent arbitrator of this issue, where the government's costs will go up drastically. $3 trillion in the second ten-year, $2.10 trillion in the first two year and that's added to a debt we can't afford. >> admittedly the cbo says it will hurt the deficit and they also say it won't send people with private insurance running to the government in droves. >> what cbo said is if you set up a plan where the government plan is essentially a mirror of the private plan that would occur. but that if you set up a plan where the government plan actually takes control and sets prices so that it can charge a lower premium, then that would not occur. you would actually have employers dumping their employee

by paying the penalty under the kennedy bill and moving people onto the government plan or the -- into the exchanges. people would end up losing their coverage because it would be cheaper phone ar employer to pay the penalty than to play for health insurance. >> senator, once we get into the details, it very quickly becomes apparent there's a wide variety of views. when you sit down with your colleagues in the senate, is there some sort of consensus, is there some sort of agreement that you can get a majority of your colleagues around? >> remember, we do have a bipartisan bill which has a fair amount of support which is thas eight republicans, eight democrats. you have the negotiating group involving six people, six democrats, six republicans on the finance committee which appears to be making progress and hopefully is making progress. i'm hopeful we can reach a bipartisan consensus.

i think it should be bipartisan. i think a partisan plan would be suspect. the american population would wonder whether or not it was fair to everyone. it probably wouldn't be fair. so as a practical matter we should have a bipartisan plan. >> senator gregg, we want to thank you for your time and we'll see you next week to talk more about this very subject. >> any comments or questions, there's a lot to talk about, our address is squawk@cnbc.com. when we come back, earnings from exxonmobil in about 30 minutes' time. you'll want to hear that. plus, some key economic data that could move the markets, jobless claims today. still to come on "squawk box," what a health care overhaul means for your pill box.

welcome back to "squawk box" on this thursday. let's get a check on the markets at 7:30 eastern time. futures looking pretty good after asia had a decent night overnight. europe's been in the green for

most of the day. we'll open up by 70 point or so just after a couple days down. >> yesterday, yeah, all day, never looked like it had a chance of, you know -- made a couple of moves. that auction really -- >> yeah, a little spooky. >> yeah. and i saw, you know, santelli said he wished he hadn't used the c-plus the day before because the c-plus was so much better than the one yesterday. you know, when you're grading on the curve he had to go way down based on yesterday. so the rest of these should be interesting as we go out even longer. >> longer on the curve. >> the higher they go, you remember what happens, ka-ching for the banks. are you saying that's a bad  thing? >> i'm saying there's a bright side to everything. if the long goes up a little -- >> mark vitner said it's not a problem. it's just a look at the market

climbing -- >> let's hope so. everybody's knee-jerk reaction whenever you go up ten basis points. they say, oh, there they are. they don't want it. they own a lot on if they're going to drive down the dollar, let's think about it. >> let's review earnings. dow chemical with a profit of five cent, analysts expected the company to report an eight cent a share loss. that bid/ask a little skewed on the ask. do you component travelers fell short of estimates by reporting 2q profits of $1.25. reduced their guidance for the full year but the increased guidance falls short of current street estimates. motorola surprised the street by reporting one cent a share versus forecast of a four cent a share loss. our special on "america's health care crisis" continues this morning with the ceo of cvs caremark, along with our guest host governor howard dean, former governor of vermont. good to have you, tom. have you heard any discussions about health care this morning? >> i have.

i've been listening in. >> where are you coming down and do you believe senate finance is actually delivering something we can all live with? >> i think senate finance is on the right track. i think it's a combination of coverage and reform. and really using a public/private partnership much the way they did with part d -- med part d for prescriptions. >> and so where does that leave us with the house bill? does that sort of dissolve into partisan politics during the recess or the liberals who are calling this a nonstarter, are they going to come back and demand something more? >> well, your guess is as good as mine. i'm not a politician. and i -- i don't pretend to play one. i think what the american public wants is a way to rein in the rising costs of health care. we need to do that as we expand coverage for those in the

country who don't have coverage. >> how are you weighing in on this? how are you making your voice known in the debate? >> well, we've met with the senate leadership and the staff of the senate leadership. we've also met with, obviously, our own congressional staff. we've met with the administration. and what we're proposing is to have reform that lets the private sector weigh in. obviously, not just health care reform, but there needs to be some insurance reform also around preexisting conditions and not, able to drop anybody's coverage. so i think it's a combination. but i think it is a private/public partnership. the issue for us, when you think about it, there are things we can do around reform, around best practices in medicine. evidence-based practices. there are practices around the country for procedures that are significantly less costly.

and the government should be reimbursing that. >> like what? >> the use of technology, all those things we are proposing. the use of generics. obviously, we have it in the chemical side, we're proposing it also in the biotech side. >> tom, while we have you here, i look at your -- $50 billion market cap for this drugstore, which is also obviously caremark. you now have to be a spokesperson for american business and how the economy is. i mean, what are you seeing in -- across the board? are people trading down? are they bypassing all the sales in the front of the store just to get to the pharmacy? have you seen a bottom? >> i don't know if we've seen a bottom, joe. you know, we're fairly recession resistant. i will tell you this, six months ago, nine months ago, we had seen more pill splitting. in other words, people cutting their pills in half or skipping doses. fortunately, for our health care system and for our citizens in the country, we're seeing less of that now. so that's a good thing.

conversely, on the front end of our business, you've seen our result. our results are very good. but people are trading down. they're going to smaller sizes. they're using private label. we are not proceed mossing more but people are seeking out promotions. so i think the american consumer is still shaky. you have unemployment up double digit. people are saying more, which is a good thing and a bad thing. but at the end of the day, the consumer is still on shaky ground, i think. if we're not bottomed out, we're getting close to the bottom. i expect things to hopefully improve going forward. >> tom, as a business leader and a ceo, when you consider providing health care to your many employees, what do you take into account? what do you look at with rising health care costs and what do you think of a public plan? >> that's a great question, becky. we are in a unique position because we're the largest provider of prescription health

care in the country. we're also one of the largest payors. we pay -- our expenses are probably over $700 million in health care expenditures for the company. now, we put some things in place around health care coaching, around the use of generics, around the use of mini clinic which we have in our office and the company, which reduces visits to emergency rooms. >> the clinic in your office that people can use instead of going to doctor's offices? >> the clinic is in our office. they use it to instead of going to the emergency room or when they can't get to their physician, especially a primary care physician. if you look at it, a visit to our mini clinic, which really deals with everyday illnesses is $50, $60 a visit versus $300 a visit to the emergency room. we are looking at,

interestingingly enough, 75% of our eligible employees take the health care plan. one of your earlier ges mentioned that, people making over $85,000, some, in fact, don't take the plan. that may be because their spouse has it or they just don't want to pay, but not everybody that doesn't have insurance can't afford it. >> if the public plan becomes reality, will you dump all of your employees onto the government? >> well, first of all, i don't think it's going to become reality. >> if it did, though. >> what's that? >> if it did. >> if it did. well, we would look to see what's the most efficient and effective way to do it for our shareholders, but most importantly, for our colleagues around health care. we think we have a very good health care plan. it's not the top but it's a health care plan where an individual can pay $100 a month and get a fairly extensive health care plan.

a family of three can pay just under $300 a month and get a fairly extensive health care plan. so we would weigh the options. but -- >> you couldn't rule it out? >> excuse me? >> you couldn't rule it out, i guess is what i'm hearing? >> i couldn't rule it out. i can see a lot of companies saying, welling we'll just throw -- we'll move all our people to the public plan and get it off our expenses. >> of course, that's not allowed under the bill so you'd have a hard time doing it. >> but you could. >> hypothetical question. >> very hypothetical. >> tom, good to see you again. thanks for the help. cvs ceo tom ryan. governor dean will stick around until the end of the hour. >> we have to go. >> what's the matter? >> we have to go. dpov nor dean, off camera, if it's worth anything and then we'll talk about it on camera. the head of the organization that represents our nation's leading pharmaceutical and biotech companies. i wanted to ask tom something about this but we have no time, billy tauzin will be here along

with former health and human services secretary, tommy thompson. more corporate reaction to the changes coming to the health care system, the krooez of tenet and wall green will be our special guest. stick around for more "america's health care crisis." . coming up on "squawk box" -- what do hospitals and doctors say about the changes coming to their industries. we hear from the president of the federation of american hospitals and a top roolgs on how health care reform will affect operating rooms around the country.

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i actually was hospitalized under tb under the so-called socialized medicine of the uk. i'm here walking and talking and chewing gum today. they gave me magnificent care. and i was embarrassed they had no mechanism at the time to draw on my own u.s. insurance to pay for it. i didn't pay a dime for three months. >> this should give us two completely different and definitely relevant viewpoints.

we've heard from the health care debate from mrigs, corporate execs, people on the front line. now we hear from chip conn, and in new york, a radiologist, which we want to speak to. mr. kahn, let me start with you. i don't know if you've been able to watch any of the show or hear any of the show, but what will the pending and proposed plans -- will the hospital industry behind either one or both? >> the industry is behind health reform. we define health reform as increasing coverage to americans, if possible even as close to universal. we understand we need to reduce health care cost, reduce the curve and improve quality. and along with that will come insurance reform. so we are very encouraged with the discussions that are going on in the senate between senator

baucus and other key senators in his group. and believe firmly that out of those discussions will come a compromise that the hospital industry can comfortably endorse. >> well, that -- >> i should note we already have a deal with senator baucus and the white house on reductions and other provisions of the bill. and we are very happy and look forward to endorsing what senator baucus comes up with. >> what about -- what about the bill in the house? >> well, i wrote a letter a few days ago encouraging the house to move forward, because we believe that this process needs to come to fruition. we outline things in the bill we like. it's a good bill on the coverage side. i must say in terms of the public option, we see that as a major obstacle to reform and don't see it as necessary. and so we're looking to the senate to provide the leadership here and have a co-op or some

kind of option that doesn't have medicare payment for providers and doesn't have hhs secretary controlling all the strings of this new option. >> doctor, do you want to just -- you've probably been watching and listening. what do you make of all this? >> well, i actually agree with chip kahn on the public option. the public option for us is probably our biggest fear because my job is to provide access to my patient. i believe the public option will lead to rationing. if we have rationing it's going to be impossible for us to undergo the kind of care we need to give to our patients in the same setting we do right now. what americans don't want is a central advisory board dictating what procedures and what types of surgeries are available to them as citizens. i think that anybody, regardless of whatever their income level, has to be concerned about that going guard because the type of care you receive in 2009 might not be available to you should this plan pass with the public

option in 2011-2012. >> do you think it's helpful when the president says tonsillectomies are, performed? >> not just through the president, it's commentary from his office and peter orszag, they're talking about the elderly not requiring examinations because they're old, they're talking about other situations where if you could take a red pill as opposed to a blue pill. as a physician, this sounds to me like a lot of nonsense. we know that every patient reacts differently based on treatment. it's impossible to legislate what the patients need. this is the first step of rationing. they're not making any bones about it. they're telling us certain patients can't get certain types of procedures they get right now because it's too expensive. >> wouldn't you agree we already have rationing? when i was practicing i never had anybody from medicare call me up and tell me what i couldn't do but today my wife gets calls all the times.

i think there's more rationing and bureaucratic than there ever has been. >> i wouldn't agree with that. patient have a choice. they can go to a second opinion, opt out of surns. the point is if you have one advisory board, one option of public insurance which is what you would have as private insurance goes out of business, as employers shift employees into the public option, there will be no recourse but to go by the one system. that's what we see in canada, the united kingdom. they wait six months for a c.a.t. scan, two months for a hip replacement. >> that's not true in the united kingdom or canada. >> if you're wealthy enough to afford it. >> medicare over time has done a good job in some areas and really fumbled the ball in regard to paying providers. on the hospital side, hospital drgs, the payment of episode of illness actually works fairly

well. on the doctor side, the payment system they have has been a total failure. actually, although people haven't really focused on it, the reason the house bill raises the deficit is because the house had to act to help the doctors out and prevent them from getting a 20% reduction in their medicare rates. that ended up costing over $250 billion over ten years. and the problem is, and i was involved in it when i worked on the hill many years ago, was we did a form for payment for doctors that has not worked out. the problem is, when you have one size fits all, if it works, it's great. if it doesn't, yooer you're in real trouble. i think that's why we need a pluralistic system and having private insurance be part of reform gives us the pluralism we need so we won't make the kind of big mistakes that have such an across the board effect for everything. >> i want to add what chip said -- >> make it fast, doctor.

we never have time. go ahead. >> right now in radiology we're facing a 40% reduction in c.a.t. scan payments from medicare. what chip said is true. with that unilateralty, that's what happened. we're not going to be able to provide those services to our patients much longer -- >> can you hold your thought? governor dean, we'll speak later. appreciate both of your viewpoints. we'll do this again. we need to do this again. >> we need to double the length of the show is what we need to do. >> i'm learning things. >> governor dean, we want to thank you for joining us for the last hour. do you have closing thoughts right now? >> one thing i desperately wanted to ask chip kahn, in massachusetts because they actually did what these two gentlemen hope are doing, they expanded the whole thing through the private spector, no private option, now are going broke and doctors, hospitals and a big panel of other people in the

medical industrial complex just voted to abandon fee for service medicine in order to control costs. that's a step in the right direction. i wonder very much what those two folks thought about that. >> that is the argument for why we need to do this again and get all these people back at the table. >> do you believe the will to do this is going to erode during the recess or as some argue, is the president going to have the platform all to himself to frame the debate again? >> i guarantee the president won't have the platform to himself. the rnc is going to spend $1 million over the recess attacking the plan. i think we need to regroup. i think the house plan with the blue dog addition has helped. they have reined in -- >> maxine waters said it's a shame rahm recruited these sen terrorist. >>sterrists. >>. >> governor, dean, thank you.

we'll be bab. >> we have a lot more to come on the special edition of "squawk box." in the next hour, the ceos of tent health care and walgreens. they'll be joining us with their thought on health care reform. exxonmobil also.e g. okay...um...eighteen pounds and a smidge. a smidge? y'know, there's really no need to weigh packages under 70 pounds. with priority mail flat rate boxes from the postal service, if it fits, it ships anywhere in the country for a low flat rate. cool. you know this scale is off by a good 7, 8 pounds. maybe five. priority mail flat rate boxes only from the postal service. a simpler way to ship.

hi, we're the "squawk box" team. we would like you to join us every morning at 6:00 a.m. eastern on -- is this a -- >> no, this is not a promo. this is earning central because

there's a lot of earning news along with health care stuff going on. >> scratch that. >> we do look good all standing -- >> hi, i'm joe kernen, this is becky and my friend carl. no, let's go to earnings central. cigna reported quarterly profit of $1'14, 18 cent above estimate. this managed care company is gouging clients, obviously not providing -- no, no, take that all back. but obviously there is a managed care company that did report a profit that was -- >> how dare they? >> also increase full year guidance. >> tyco shares called higher. they earned 58 cents a share for the third quarter, 13 cents better than wall street expected and was helped with better than expected revenue from services. not a company where it was just cost cutting. >> one more stock, newell

rubbermaid, up by 12 cents. if you're not going out to dinner you might be storing leftovers and some -- >> the new rubbermaid -- >> can we do -- >> do you want to sing? >> i want to do the promo. hi, we're the "squawk" -- >> yes, we are the "squawk box" team. join us every morning, monday through friday, 6:00 a.m. >> don't watch the cheap imitators, the people that change their names. watch us. >> when we come back, former health and human services secretary tommy thompson with his formula to fix health care, the ceos of tenet and walgreens. fithe same tools the pros use, so you can be a disciplined trader. by selecting from eight advanced triggers, your order gets executed, even when you're busy. and with trailing stops to help you lock in profits and minimize risk, you can be confident in your strategy, no matter which way the market moves. find out why more and more active traders

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this is a special presentation of "squawk box." "america's health care crisis," the diagnosis, a severe economic illness. the treatment, still unknown. house calls and second opinions today from health care leaders, government insiders and doctors and patients on the front line. former health and human services secretary tommy thompson, pharma ceo tauzin, walgreen chief greg

we wasson and ceo of tenet health care. a "squawk box" exclusive. >> good thursday morning. welcome back to "squawk box" on cnbc. first in business worldwide. i'm carl quintanilla along with becky quick and joe kernen. a pretty good morning shaping up on the street, a good night in asia and europe's been in the green for most of the morning. on some good quarterly result. we are waiting for numbers from exxonmobil and we'll bring you them as soon as they hit. some other names on the move right now, though, newly minted dow componenting travelers, a smaller than expected quarterly provt. revenue was in line. raising full year guidance though still below current consensus. seeing analyst calls on two dow components, ge upgraded to buy from neutral at goldman sachs, the parent of nbc universal gone from 13 to 15.

mcdonald's downgraded to equal weight from overweight at morgan stanley. those are two big names. i think we are just getting observati exxon. >> 84 cents. i love when exxon comes out because the numbers are just so big. the one change we've seen as oil has come down, and we're all talking about health care and the financials, is that we're no longer mad at exxon for making so much money. and they're not making quite as much. now we're mad -- >> look at revenue expected, they're only expected to make $72 billion versus $180 billion a year ago. >> unit sales, if you can express it that way, wouldn't be that bad but the price is so much lower. >> we still just have one headline. >> one headline that would put it below. we don't -- we don't wait for the big $10 billion of earnings have quarter with exxon now.

now we're waiting for goldman sachs to make $3 billion because of government assistance is what we're -- >> and trading -- >> we're always mad about someone's profits and they end up paying all those taxes, which is a bad thing. united health care, we waited for that and cigna -- >> let's move past the anger. >> you want to move past anger? >> yes. >> it's good to make profits. >> they needed a helping hand -- >> they some took it just to play along. >> you're right, it's very complicated. >> it is complicated. nothing hitting other than than the -- i don't see a press release. excluding one-time items. there are some one-time items. net income, excluding the items was $4 billion. they were the first company to earn over $10 billion. they've done it in the past. we're talking at this point about $4.09 billion, much less than previous quarters. the stock hasn't come down that

much but down in the 70s at this point pell we'll come back glo we will come back and get insight. our focus has been health care reform. this new nbc/wall street journal poll suggests support for the president's plan is slipping, especially among those that have insurance. that's the split between those that think it's a good idea and a bad idea. it's even higher on the bad side for those who already have private insurance. our next guest, our guest host for the next hour, former health and human services secretary tommy thompson, served in the bur bush administration, good to have you on the show. >> my honor. "squawk box" is really picking up a lot of steam. where exxon is losing, "squawk box" is picking up. >> we would agree. i think you're going to introduce another guest well. >> you want me to? >> yes.

>> some of the most influential business leaders joining us for the "squawk" summit, former representative billy tauzin, pharma president and ceo. one of the founders of the blue dogs, a conservative group in the house which just cleared the way yesterday for a health care bill vote. but you were a democrat then and eventually you switched, right, mr. tauzin? >> yeah. i think so. tommy thompson called me a transristocat when i did that. >> we don't judge. >> have you had a chance to watch any of the show? >> yeah, i sure have. >> any comments, criticisms, embellishments of things we've already talked about? >> no. it's a good show. you have a real contrast between those in the real practice and governor dean, you know, who's talking as a public official, trying to change things. it's a good contrast.

one thing i think that comes out of all that, you know, in recent polls, americans are deeply concerned about keeping what they have. they feel -- they are getting a sense of, threatened. i think some blue dogs, the grassley/baucus finance committee may help fix the bill that alleviate the concerns. the deal is, you know, employers decide what insurance you get. they pick the coverage. th if they decide to dump into a public plan, you could lose it. that's what's really bothering americans. >> off camera i asked governor dean about what we should do buy logics, five years, seven years, 12 years? he said 12. it was a surprising answer from governor dean. are you worried in general that any of these plans are going to hurt innovation in either b biotech or the big pharma?

>> governor dean is right. he comes from an area where a lot of biotech is going on. it's the future of medicine. it can happen here, in england or singapore. it doesn't have to be in america. if we don't have a system that encourages is, you know, the kind of financing it's going to take to do biotech is much more expensive than ordinary medicine, if it doesn't happen here, we're going to lose something extraordinarily valuable. the 12-year protection system is hopefully going to sustain in the house. it's already passed the health committee in the senate. it's the right thing if you want biotechnology research to occur in america. >> billy, you know better than any of us the fact that most of the research on new drugs is actually coming to the united states. it used to be in europe. now it's come to the united states just because of the intellectual property rights that pharma and biotech companies can use. you may want to get involved in

why the 12 years is so important for that research to continue so that americans like all those people that are watching us that have health problem, that good medicines are things that are really going to alleviate that problem. >> tommy, let me start with the fact that five years ago they gay me a 1% chance to live. one of those great new biotech medicines saved me from cancer that was i was ready to succumb to. that's true, the biotechnologies are extremely difficult to manage and produce and test. they're going to cost like $1.5 billion over 10 or 12 years to develop. if you don't have an adequate protection period on all that data you collect to protect the work you've done, nobody's going to put money into it. we see young biotechs failing every day in america. we lose about a quarter of them. the key is to keep that young industry growing, to keep that new technology coming because, quite frankly, those

biotechnology drugs are going to be the ones that cure cancer. if you want to cure cancer, you really shouldn't surrender on the first day of the war. we really ought to help those companies grow. >> that's one of the biggest differences between our system and a government system in europe, because the innovation and the protection is here. the new drugs, like my wife has got breast cancer, my daughter had it. i'm looking for that cure for all women in america. and the only way we're going to have it is the innovation of the research, like your cancer, billy. you wouldn't be here if it wouldn't be for the new drugs out there. that's what america's concerned about. >> in fact, the drug that saved my life has been denied to the people of uk by the government-run system. i'll shock you when i tell you this, but in most countries in europe, our companies have to blank their websites. they're not even allowed to show -- >> you're not going to scare me. i know about that. >> you know about it. we can't even show the new medicines to citizens in europe because the government doesn't

want to pay for them. they literally hide those new medicines from folks who desperately need them in many european countries. >> that's true. >> that's pretty crazy. >> well, we've had a lot of discussion this morning. a lot of it has been about the public option, the senate bill versus the house bill. you want -- secretary or governor, what would you rather be? >> governor. call me tommy. >> every single person on today has -- >> many titles. >> -- i've asked which one they prefer. governor dean was just on. he says you're not even allowed as a corporation to put people into the public plan for a matter of years. and it would not be -- it would not cause a mass migration away from private insurance. >> well, i like governor dean. he's just plain wrong. the truth of the matter is -- >> he tells me about -- >> the thing is, it's not -- we don't know yet. it hasn't been written.

and everybody -- individuals that really want a public plan, the reason they want a public plan is for the government to control health care. that's their ultimate objective. so how they write it, how they pass it and how it's set up will determine how effective that public plan is going to be and how many people will migrate from the private to public. >> is there some way it would be written that you would agree with the public plan? >> there's a possibility, but very unlikely. because just the name of the public plan is that the government is going to be running a health insurance program that's going to compete with the private. that in and of itself is the problem. >> they do run a government health care plan. >> medicare.]ç the largest health insurance company in america. i ran that for four years. i know more -- >> than i've ever known, yes. why do people talk about it as if it's something that's novle. >> it's a government-controlled plan, not private.

when we set up medicare advantage, more people migrating to that. 22% of people are going to that. it's competition. any time you have competition, you have an opportunity to compete. the fact of the matter is, medicare dominates and controls all the costs and also determines the price. it is a -- it is completely mandatory from the top on down. >> is it -- so is medicare an example of the government doing something right or wrong? well or good? i mean, well or bad? >> medicare's going broke. medicare's broke this year. >> why, then, are so many americans who are in it 6 satisfied with it? scared to lose it. >> nobody wants to lose it because it is the -- it is a net. it's a safety net for all of us in that age group and those people that are disabled. medicare is a wonderful program and nobody want to get rid of it. but it's got to be fixed because it's going broke. if we don't fix it -- the problem s nobody in washington really wants to fix it because you're going to make some tough

decisions on limiting services, on limiting new innovations, increasing the amount of money, and also doing things at the time of death. 40% of medicare is spent in the last six months of a person's life. >> you don't believe the cost savings projected -- >> absolutely not. there needs to be another way because congress doesn't have the capabilities. that's why i do support the president. and the individual and the administration by setting up a program where medipac or a new advisory committee that has teeth in it to make the decision to hold down the costs. >> because congress can't do it? >> congress can't do it. that's the problem. >> you'll be here, governor. pharma chief, billy tauzin, thank you. we appreciate it today. any final comments, quick one? >> the president is right about the most important thing, in that we've got a moral imperative and an economic imperative to fix the system. we have too many people that don't have insurance. that's a burden on the system.

it encourages bad health care because it doesn't do anything about preventive and disease control. obesity and the chronic diseases are running rampant. it will break this country very soon. we have to fix it. tommy's right, we have to fix it right so people can keep their private systems when they want to. we have to fix the public system so they're better. they are going broke. they don't always do their job for people. we have to make sure in this country that we have the kind of competition that tommy talked about. medicare part d the competition is so intense we've saved the government $540 billion over ten years. that's a real cost bending, if you will. so we have a lot of work to do. i like the idea that we've got a democratic process this year instead of like we are-h in the 1990s when it was a take it or leave it plan. this time we have a chance to get it right. >> congressman, good to see you. thanks for the time. the governor will be here for the rest of the hour. we're watching shares of

exxon. >> 84 cents versus $1.020 see what the street was looking for. >> revenue above. >> you're going to see a 71 bid but we'll get more on these numbers. >> the opposite of everything else. >> right. >> earnings are below but reven revenue's above. >> yes. >> interesting. more on our "squawk" summit on health care. . look who's squawking this morning. tenet health care ceo and walgreens ceo. you have questions. who can give you the financial advice you need? where will you find the stability and resources to keep you ahead of this rapidly evolving world? these are tough questions. that's why we brought together two of the most powerful names in the industry. introducing morgan stanley smith barney. here to rethink wealth management. here to answer... your questions.

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i'm still absolutely dumb-struck. why can't this country do what every other country does, single payor, take it off everybody's taxes, same amount, you walk in and you get cured? >> america's health care crisis in the spotlight this morning. the house making some progress, they say, on legislation this week. kentucky democrat john yarmuth is on the house ways and means committee, joining us from the

hill, along with tommy thompson. good to see you. >> good to be here. >> we're hearing conflicting things. the democrats are saying the blue dogs have done a service to the country, they helped make this a better bill. some say there's no consensus among that group. is this progress we're hearing about real progress or simply a function of the fact that the bill is not dead today? >> well, i think what it -- what has happened is that we've removed a roadblock in the energy and commerce committee and we'll get the bill out of that committee so that the three committees working on the bill can kind of mesh all of the changes that we individually have made and bring a bill to the floor after the august recess. so it's a very definite progress that we've made because otherwise either the committee was going to have to basically dispatch the bill to -- without acting on it, which would have infewer rateduewer infuriated a

people. we'll then put all of them together and bring a bill to the floor later this fall. >> you do support the public plan, though, the president's plan, correct? >> i do support the public option. i don't think that any bill that comes out of the house will come out without a public option, without a robust one. >> are you dreading, then, the recess and the earful that i imagine you'll get from at least some constituents? >> no, i'm not dreading it at all. if you look at some of the polling, i think nbc's own poll shows there's overwhelming support to do something about reforming our health care business. right now there's a lot of confusion because the senate is doing two different thing, the house has never focused on one until now, the president has been flexible. now we actually have a package to go back and explain to individual americans and to small businesses what this means to them. they don't have a clear picture of that. >> but you cannot be encouraged by the nbc poll. >> no, actually -- >> i mean, rising disapproval

and withering approval. >> still overwhelming consensus we need to do something about health insurance, that 66% of the people are afraid of losing their insurance. 14,000 people a day are losing experience. when we can go back and sprain to our constitute yeents, this exactly what the insurance is intended to do. >> 90% of the people have a private plan.úo by a 2 to 1 margin they're against the public plan. >> the 90% -- well, it's about 85%, actually, have some kind of private coverage or 160 million people. and under our proposal, they'll be able to keep it if they want to keep it. governor thompson, i think you actually made the case for the public plan because if the private insurance companies, as they've done with medicare and medicare advantage, they know they can compete with the government plan. they add value. my constituent company does

that. >> congressman, the democrats want to take away medicare advantage because it does have competition from the private sector. you want to take the money away from medicare advantage and set it into this public plan. >> well, because -- >> and when the polling is done, congressman, on a public plan versus a private plan, there is no comparison. the public does not like a public plan competing with a private plan. that's the problem with -- >> every poll has -- one poll, 72% of the people like a public option. it's a public option. that's what's important. people don't quite get that yet. they'll have a choice. >> the more they get it, the more they dislike it. that's the problem you'll have as a democrat. >> well, you know what, governor, if all the insurance companies can do is charge more, then the public option for the same services, then maybe we shouldn't really care whether they exist or not. i believe they can add value just as my company, humana in my direct does. >> i agree there should be

reform and we should start with trial lawyers. that's something no democrat in congress will even talk about. that's something you and i and the vast number of americans, a vast majority, would like to see some sort of tort reform. >> the number of malpractice cases are down 30% from their peak now. a lot of states have done things by instituting screening panels and so forth. there's progress, made on that. it's less than 1% of the health care system. >> no, it's not when you include defensive medicine. that's where the big problem comes in because doctors have to protect themselves against litigation. litigation, that is where a big problem is. if we're going to fix health care, let's look at all the problems. let's get it all on the table and start looking at it. >> i don't mind looking at that. >> let me ask you another broad question, congressman. when it comes to the blue dogs some are arguing they have helped to roll back cap and trade. they've helped to roll back or stymie card check. they are obviously having an impact on health care. are they talking some sense, so to speak, into the president right now?

>> well, they certainly have a little bit different perspective. you know, we have a very, very diverse party now. that's why we're in the majority and the republicans in congress have a very ideologically str stratfied party. we're all committed to making health care reform. we're all committed to making sure every american has access and can afford health insurance. that's what we'll be doing whether it's the blue dogs, the new dems or progressives -- >> and some republicans like me. i've been fighting for this passionately. we can really do it. i just hope we doenl make the big mistakes and try to reach too much and get too much government control in when we really have an opportunity to reform health care for all americans. i think you and i agree it needs to be done. >> absolutely. >> and i sincerely believe we should try on a bipartisan way to get it done and get it done

over the august rerecess. >> you've been a very constructive voice. >> congressman, thank you for your time today. >> thank you. >> the secretary will stay with us. when we return, we are waiting on breaking economic news. we have the weekly jobless claims that do have a big impact on the market today. "squawk box" will be right back. natural gas is a cleaner burning fuel, yet a lot of natural gas has impurities like co2 in it. controlled freeze zone is a new technology... being developed by exxonmobil... to remove the co2 from the natural gas... so we can safely store it... where it won't get into the atmosphere. exxonmobil is spending more than 100 million dollars... to build a plant that will demonstrate this process. i'm very optimistic about it... because this technology could be used...

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still to come this morning, america's health care crisis, the "squawk" summit is heating up. breaking economic news, weekly jobless claims. we'll have that number when we come back.

one of our favorite numbers of the week, weekly jobless ; claims are out in two seconds. kevin is in chicago. >> 584, carl. that's a very good number compared to what it could be. the seasonal adjustments are really screwing it up. 584 versus last week's 554. we were expecting something much higher down here. bonds are up a little bit right away. >> okay. and we've been looking -- there's a look at futures, which are improving. market seems to have the same take as you do, kevin. any word on the four-week average continue i claims? >> they have come in at 6,197, carl. again, whatever's going on with these adjustments, especially centered around auto production, is not yet balancing out. that's the number. that's what the paper's going to read. i would still say it's up for revision some time in the future.

>> okay. thank you. let's bring steve liesman into the conversation. is your computer working? >> yes, it is. >> can you add to what kevin said? >> this number was looked at by economists as the first clean number we've had in weeks because the auto layoffs that came in earlier, the seasonal adjustment was all messed up. we think is a cleaner number. when kevin says there was a higher number expected some guys on the street were looking for plus 600,000, which was an absolute return to where we were. what we see is there is some improvement. if this is, in fact, a clean number we can say there has been a downshift in jobless claims. when i look back at what we call the insured rate, those getting unemployment insurance, we can see it's ticked down in the past couple of weeks. that in general -- there's the near term chart.

there's the downturn. what you'll see is this number turns down ahead of a decline in the unemployment rate. we need -- we have a lot more to go here, but -- and we'd like to see that confirmed but you see here, that number tracks just a little ahead. the peak there of the yellow line and the peak of the blue line, the peak yellow comes before. >> steve, i don't know if you heard earlier, dow chemical came out with their numbers, reported a profit, that was unexpected and made comments that it looks like the american economy is reaching a bottom, from his perspective. >> what i'd be interested in is employers like that, whether or not they cut employees in a panic. whether or not they're going to feel now relative to the total level of demand, they're going to have to bring people back in a hurry. i think that possibility is out there. we have -- we'll have the discussion tomorrow. there are some guys out there saying,ing maybe we're underestimating the rebound here. i'll just tell you why. the very good reason is that everybody is sure it will be a lackluster recovery, which i

think on our part, at least demands a discussion as to whether or not it's possible it could be a little better than expected. >> could i say something real quick? >> sure. >> here's what i would say, if, a big if, if steve's right, then the fed better get off the pedal fast because they have an emergency rate structure. if you look at what happened yesterday, fannie trading at better than treasury paper, libor down to all-time low. the fed has to get off the zero structure if this is accurate because they're pushing way too hard for what's going on. this is going to make their job a lot tougher. >> is it me or is the employment report a week from tomorrow? >> the most important report of our lifetime? >> normally we wait for a week before we do things but i don't think is is wrong to do this right now. let's do it. >> start to cheese it up. >> right, with your favorite music. >> do you know where i'm going to be for that employment

report? lee's lodge, lee's lodge in maine. >> can you hear? . ♪ the final countdown >> a week from friday. we usually wait until the week of the employment report but this is -- >> a week and a day ahead of time. >> is it not important? >> the excitement is bubbling all over. it's incredible. it's like a bubbling pot of water. >> it's huge after this employment number. >> i think it may be too early to see that. >> kevin has a point. >> he has a point. the trouble is my comment is entirely hypothetical. there are guys out there, david greenlaw, some sitting there, and i'll be looking at the gdp reports saying there's a possibility of at least one outside quarter -- bill dudley, the new york fed president pointed out yesterday, he said if everybody starts inventory restocking at once -- this is wild bullish talk, he has to be careful here, but the possibility exists, typically when we come out of resegs, 5%, 6%, gdp growth, everybody's

certain it will be 1%, 2%. economists get the terms wrong all the time. let's have a discussion and debate about the possibility of an -- >> meaning what, 4%? >> 4% would be subnormal for a recovery or expansion. but if you put together -- gdp is the change on the change annualized so it's incredibly exaggerated. i don't think there's enough there yet to make policy on. i think the fed should be prepared to make a turn quickly but i don't think it should be just yet. >> kevin, did you point out to steve with the two-year yielding more than the fannie and freddie that the government is seen more bankrupt than fannie and freddie? >> you could spend it with the stock market up. the bottom line is -- are you going to make a fannie and freddie for health care now? >> there's no money. >> we aren't doing -- >> let's be clear about this, the government is fannie and freddie.

the government is addition the problem in the markets pricing securities. fannie and freddie was trading above the two-year. i think the risk is the same except for some inherent liquidity risk inside there. >> it doesn't remove the fact that we've moved down to them. i mean, you know, it's just ridiculous. >> there isn't enough money out there, kevin, to arbitrage the life of securities here. >> i know. i try and do it every day. they won't -- >> you tell me that. >> they won't lend it to you. >> you can't -- that's critical. you cannot do your job of policing interest rates in the market, because you can't borrow the money to arbitrage the spread here, that what you're saying? >> that's why i'm down here talking to you. it's ridiculous. >> talking to me is ridiculous or -- >> no, no, i enjoy talking to you. the fact i can't do it is. >> that's why you still have essentially -- >> i don't -- i understand the arbitrage. i don't understand the lack of outrage, i guess, is what i'm

saish. >> what do you want me to do about it? if i was angry about it, what would i -- >> kevin, by the way -- >> kevin has rid rage because he has a bad case of poison ivy. >> yeah. >> roid rage. you're going to be at lloyd's lodge? are you going to tweet? >> no. those 30 guys last year were right. we came back with a morbid story -- >> that will never happen again. >> thanks for that incredible tease, guys. anyway -- >> we look forward to it and we'll see you there next week. >> thank you. i appreciate it. >> steve, thank you. kevin, thank you. feel better. our health care summit reconvenes in two minutes. coming up, the industry at the center of the storm. tenet health care ceo joins us.

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i'm not nervous about it at all because what we spend now we can save aa lot more in the future if we have a healthier nation. >> welcome back to our health care summit this morning. we've done a lot of good work trying to get our arms around where policy is headed.

trevor, ceo of tenet health care along with tommy thompson. trevor, welcome back. good to see you again. >> nice to be here. >> so we're all taking stock on where this thing is as we go into recess. i guess i'm wondering, do you fear the creation of a public plan less than you have, up until this point? >> that's a great question. you know, as i watched the debate, and particularly watching it on your show this week, i think there's been too much talk about the public option. i would say -- >> because you don't think it's remotely possible or what? >> no, i think it's quite likely, but i think what is likely to emerge is probably less effective than its proponents would hope and less scary than the proponents have portrayed it. >> you do think -- you think it's likely? you think it's likely to come through -- so the president will sign a bill that includes a public plan? >> i'm not expert in how the sausage is made but my expectation based on what you've

heard out of all these different contest, of course we have our eyes most on the senate finance committee, is that there will be some form of public option. there's a huge difference between a public option that is mandatory and can set rates and we must participate in and one that's a not for profit co-op that could be -- >> we're not calling out a public plan. those are two -- this is semantics, then. because the -- the co-op is a totally different -- that's a totally different animal than a public plan, right? so if you say there's going to be a public plan and you mean co-ops, we need to make that clear. >> and i think that's part of the issue, joe, is that there are a lot of semantic differences between a public plan that is mandatory and sets rates just like medicare or medicaid. that would be a very destructive thing. i think that would crowd out a lot of private insurance and would cause real distress in the health care system. if you have the opportunity for a not for profit co-op as one option of many in a health

exchange, that's a very different animal. in fact, that type of a plan, the potential for it, actually exists in the medicare drug benefit. it's never been activated. >> trevor, you know as well as anybody does, that the progressive democrats have said they will not pass anything in the house unless there is a real authentic public plan in competition with private. and that -- and they have enough votes to stop anything in the house. so if they're going to pass in the house and they keep their position, there will be a public plan. >> well, mr. secretary, thank you, yes, for that clarification. like i said, i think it's a little premature for us to -- for me at least to take a position about what is going to happen. i would just say that if there is that sort of, as you put it, authentic public plan, where hospitals would be forced to accept it, the rates would be low, i think that would be something destructive. it would crowd out insurance.

employers would dump employees into a plan like that in an attempt to save money. you know, we in the hospital industry have had to shift the costs and the burden of caring for the uninsured to private insurance, commercial insurance. i don't know if that type of a public plan existed where we would go to shift those costs. >> you know, a lot of critics of the public plan say, a, that the government is hugely inefficient and then they argue that, b, private insurers should fear the government because they're so powerful. why would you be afraid of such a large entity that's so inefficient? why would, i guess, americans opt for that if it was really so badly run? >> yeah, that's a great point, because there is some degree of illogic to that argument. i've heard it discussed that the government is inefficient in marketing and distributing a plan but the government can be very efficient in setting rates, dictating rates. that's what maed care basically does, it's a rate-setter. from a hospital's point of view,

about 70% of our revenues are from medicare and medicaid. those rates are dictated to us. about 25% of our patients are commercially insured. we're able to negotiate rates with insurance companies. about 5% are uninsured or charity patients that don't pay us at all. >> trevor, you have to have your private -- that 25% to 30% as a hospital, you have to allow those individuals, they have to subsidize what you're getting from medicare and medicaid because they are not meeting your costs. >> that's correct. in fact, what's been happening for years is costs shifting. the government has basically taken advantage of its pricing power to force hospitals and doctors to shift costs to private individuals. those individuals are insured by their companies. the companies have shifted costs onto the patients by enforcing higher deductibles and higher cost sharing of the premium. s. ultimately with the uninsured,

that's a big ticket, very big cost that hospitals and doctors are facing. >> that's really -- that's really the problem. if you have a public plan, you're not going to be able to shift that. hospitals will have a tremendous financial problem going forward unless you have the opportunity to make some sort of changes in this algorithm. >> everything would have to change. you might as well just make the hospital entindustry into a utiy and regulate everything about it. >> trer, we don't have enough time. i hope you'll come back. >> i'll be back. >> thank you. our health care summit will be back in two minutes. up next, drugstore giant walgreen, will newly insured patient be the perfect profit for the chain? g b

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let's take a look at something -- let's take a look at some stocks to watch. we want to mention a couple. look at the action in exxon.88 the company reported 84 cents,

which was below expectations of $1.02, downstream as you$1.02. downstream as you might think was weak. but upstream based on the price is, below expectations. $4 billion is the profit. noing to sneeze at. you make $10 billion in previous quarters. the most in $350 billion. it's dpo ee's going to be down . well above the dow. kellogg, off expectations. revenue in line with expectations raising full-year a guidance. a great business to be in at this point. cigna reported $1.14 well above where wall street was in better than expected revenue. the four-year guidance of $4.80. had been $3.70 to $3.90. revenue was above expectations and people like this report when you look inside the metric, the stock is higher. general electric is indicated p

up. goldman sachs, target 16 to 13. goldman is noting commentary from barney frank, the chairman of the house financial services committee who indicated that regulatory reform would likely not force the separation of ge capital that's been overhanging -- an overhanging worry. >> and some of the companies that have the existing finance -- >> might be a little bigger than some of those. >> this is the one -- this would be, yes. >> it's not a ge -- >> right. it would effect -- much bigger -- $100 billion in assets. it's not being reflect in the share. >> back to the health care summit right now. greg watson, walgreen's president and ceo. the guest of today, tommy thompson, former health and

human services secretary. greg, thank you for joining us again. it's good to see you. we know in the past we've made comments there's a problem out there when it comes to the cost structure for health care and we have to make some progress in reforming that. you said you're behind many of the obama proposals. but what is the best proposal out there and what worries you the most when you look at the different proposals out there? >> i look at the show on the public-private demand. my main things on is as an employer, i'm covered as an employer. the debate is the true reform of the health care delivery system. and when i talked about one of the key principles i think the president's had from the beginning that he's asked that any health care had, it focuses on prevention of disease and health and wellnd.

i think that's where an employer can help. a lot of good innovation that can focus on preventing disease. we, as an example, we insent our employees who are nonsmokers. obesity is one of the top drivers of disease in this country. focus on controlling obesity which drives diabetes can reduce overall health care costs. so, i would like to see more focus on reform of the delivery system and i do believe prevention, health, and wellness is a great way to go. >> one thing you mentioned on the disease management and wellness and prevention, chronic illnesses make up 75% of the cost of health care. but it's not only obama, it's republicans and democrats on a bipartisan basis have put both of these particular subjects in. this is one bipartisan area that could rally around. and it's a central part of health care reform. 75% of the costs when jesse james was asked, why do you rob

banks? that's where the money is. this is where it is in health care. go after it in a bipartisan basis. not only obama but republicans and democrats want to do something about wellness and chronic illnesses. >> it's interesting that you mention that. >> go ahead, greg. >> as governor, i totally agree. and i think we're well positioned as a company to play a big part in that. we have pharmacists on the front line of health care today. 22,000 of them, for example, 16,000 of them are registered -- certified to give immunizations and vaccinations. what a great opportunity to play a big role in if indeed we see an h1n1 concern this fall. so i think there's a great way for us to play a big role in -- in driving prevention health and wellness. we're pointing, as you well know, nurse practitioners and many of our stores across the country to take care of the three common ailments such as colds and sore throats and keep people out of emergency rooms

which are high-cost visits. >> those are all ways to offer a carrot to get consumers to behave better. should there be a stick -- should you be penalized if you're a smoker, if you're overweight? what do you think? >> there's a debate on whether you penalize or incent. i think the approach we take is we'd rather encourage people to treat themselves and take care of themselves. so i'd much rather go an incentive route. but i think changing people's behavior is indeed difficult. and i think that -- i think we would rather encourage and incent them to change. >> greg, we've got to go. and we had tom ryan on earlier. he said was it a public plan would he opt out? you sound like you have a lot of great ideas on how to provide for your employees. would you opt out as a public plan? >> i agree -- the devil is in the details of a public plan and

what it would look like. i think we need to focus on how to lower health care costs so employers like ourselves can remain in the business of providing health care and high-quality health care employers. i don't know how it will play out. the devil is in the details. i think we've had -- we've experienced a public offering that has worked okay over the years. that's medicare part d. it's served as a safety net and allowed private players to be innovative for seniors prescription drug benefit. >> greg -- >> i tell you this, head of wallgreen's opted out, that's not making for a good headline. i'll say that. we've got to go. >> thank you very much for joining us. >> nice seeing you, greg. >> thank you very much. coming up, the test results are in. the final diagnosis from tom think thompson.