captioning sponsored by rose communications from our studi in new york city, this is charlie rose. >> rose: janet napolitano is here, she is the secretary for homeland security, created after the 9/11 attacks, the department oversees 22 agencies ranging from the coast guard to the secret service. its wide mandate i clouds

counterterrorism, border control and natural disasters. since being confirmed, she has dealt with the response to swine flu and violence at the u.s./mexico border. today she outlined the administration's approach to counterterrorism at the council on foreign relations. >> so if 9/11 happened in a web 1.0 world, terrorists are certainly in a web.0 world now. and many of the technological tools that expedite communication today were in their infancy or didn't even exist in 2001. so therefore, more than just hardware, we need new thinking. when we add a prominent former computer hacker to our homeland security advisory council-- as i just did-- it helps us understand our own weaknesses that could be exploited by our adversaries. the job of securing our nation against the threat of terrorism is a large one and it may never be totally completed.

but we have a much larger chance at success if we strengthen our own networks by enlisting the talents and energies of americans. >> rose: ms. napolitano was appoint... former governor and attorney general of arizona. i'm pleased to have her at this table. welcome. >> thank you. >> rose: as you pointed out, the last time we were here you were talking about the then governor of alaska. >> we were talking about state issues and the roles that governors play and i guess each of us venezuela ha gone our own way. >> rose: none of us has any idea-- includinger-- what her future would become. >> i think that would be a correct statement. >> rose: it would be a correct understatement. >> (laughs) absolutely. >> rose: talk about what you just said to the council on foreign relations in terms of counterterrorism and terrorism 2.0 and what your department has to do today, what its mandate and itsmperative is. >> rose: this department... >> this department was founded

in the wake of 9/11 and our goal of our department is to reduce the risk of a 9/11 attack from ever again happening on american soil. but also much broader than that. to prepare americans for disasters of all types, whether terrorist caused or whether caused by nature and to coordinate... to be able to coordinate the response to those things. so it's a broad, broad mandate. and we've focused today on counterterrorism in a much different environment where the tools that terrorists can use are much more sophisticated than they were prior to 9/11, where the terrorists themselves are much more networked into different types of information than they were prior to 9/11. and that requires us to think not just about what they're thinking now but what they could be thinking in the future and we always need to be wary of the risk of terrorism but also live

not in fear but knowing that we are constantly in a state of preparation. >> rose: how safe are we today? >> you know, i think we are safer now than we were prior to 9/11. much work has been done in a lot of different environments. but if you were to ask me can i guarantee that we have 100% eliminated the risks that any type of attack could occur, i'd have to say no. are we as safe as we can be? that is something that we are constantly striving for. >> rose: why hasn't there been an attack since 9/11? >> a variety of reasons, perhaps. one is i think that our intelligence gathering is better. it's more coordinated. more information is shared. i think we've implemented some systems that have a better chance of catching a potential terrorist before they can get into the country.

my predecessor mike chertoff gave a statement once that i think said something to the effect that if the somebodies we have now in place had been in place prior to 9/11, all but four of those terrorists would have been prevented from coming into the country. so our systems are better. and it may be that our adversaries are simply lying in wait and waiting for another opportunity and they just haven't seen a good point yet. >> rose: do they have sleeper cells in america, do you think? >> i think they have people in america who follow and wish to part patriot in them, yes. and i think one of the chief things we have to combat is a sense of complacency, hey, this was a long time ago. government will take care of this problem, let government do it, i've got to worry about a lot of other things. granted, people have lots of things to be concerned about,

but the purpose of my speech today at the council on foreign relations is to say, look, we have to deal with this terrorism issue as a constant in our lives now. we just have to assume that there are those out there who wish to do us harm. every individual can be prepared and then you move out and communities can prepare the federal government and our international partners. so at four different levels we ourselves need to be better networked, better prepared and know better what we intend to do. >> rose: let me give you one small example or one large example of what people say is our vulnerability. that if there was an atomic weapon the size of the weapon that was used in japan at nagasaki or hiroshima, it could come into this country undetected by the present detection technology. >> well, i think it could. if it came in a particular way. and i think that our goal is to

shut down those particular ways. and then the issue is, well, who would bring it, what ability would they have to assemble it, use it, in a way to cause massive damage. and the reason i point that out is because that's not the type of an attack that's done by a loan wolf. that kind of an attack would require somebody with scientific knowledge, access to certain types of materials. that means you have a group. that means you have planning. and the more you have a group, the more you have planning, the more your intelligence has the ability to intercept and interdict. >> rose: what worries you the most? >> well, nuclear certainly. i think as well biological, chemical weapon of mass destruction used by a group that has the ability to have it

dispersed in a broad fashion. those are the things that we need to be constantly concerned about. also new threats in a changing environment. the whole issue of cyber and the protection of our cyber networks. not just from hackers but from those who want to get into and use the cyber world to get into our critical infrastructure. >> rose: and shut down our economy. >> and try to shut down our economy, yes. >> rose: you have hired a hacker, a prominent hacker, you said, to the council on foreign relations. that seems like a smart thing to do. why did it take so long? >> well, i don't know. he's actually a volunteer. he's on our special advisory committee. but we have been in the cyber area hiring real experts from the private sector to come in to really let us be at the forefront of this new battlefield. both in terms of how we coordinate among the federal government, but also, again,

with the private sector which owns 85% of our critical infrastructure. >> rose: do you have the resources to do the job? >> overall, yes. if you just look at nuts and bolts and that sort of thing, yes. this department has been well funded historically by the congress. the president himself put in another increase this year even in the wake of where we are economically. the challenge for us is how do you make sure that everybody just simply doesn't assume that the federal government's going to take care of this. because if that's everybody's assumption, we will not be as safe as we ought to be. >> rose: one of the vulnerabilities, as you well know because of 9/11 study commissions and other groups have looked it into it was the lack of cooperation between all the agencies responsible for national security and national security related issues.

have we overcome that vulnerability in terms of cooperation, in terms of sharing of information, in terms of everybody on the same page? >> overall, yes. and, again, i go back to the same analysis, do we have better intel gathering and sharing and coordination and cooperation than before 9/11? absolutely. >> rose: c.i.a., f.b.i., everybody else. n.s.a.? >> c.i.a., absolutely. the whole alphabet soup. you know, episodically are there things that could be done better? always. so the question for me is is when i came in as the secretary of homeland security is well, what's our value added to that? why should the taxpayers pay for us to be involved in intelligence gathering and sharing? and i think our value added is really that important linkage with states, counties, cities, tribes, territories. and so what we are working on now is to really make that a

very robust connection. not just for exchanging information, but also analysis back and forth. and there's a lot of work to do there. >> rose: new york city gets lots of credit in terms of the things that i read written by independent journalists but what they have done as a local organization in terms of combating terrorism and the commissioner here, commissioner kelly sends people all over the world. he sent people immediately after mumbai to look into mumbai in order to provide some kind of information that the city of new york could benefit from. >> that's right. >> rose: and you coordinate... it's your responsibility to coordinate new york city with federal agencies and the like. >> that's right. and that's right. and new york city occupies a unique role. it occupies a unique role as a potential target, as a target that already has been attacked.

but also a unique role because of the fact that it has built its own intelligence gathering apparatus and it has organized a huge counterterrorism effort in new york city and in the new york city region. we don't have those things all over the country. but we do have cases all over the country. you may have seen, for example, that there were arrests a couple of weeks ago in minnesota. there were arrests rely this week in north carolina. so we have.... >> rose: tell us about those because that's interesting stories. the arrest in north carolina in terms of local... how would you characterize it? >> participation? knowledge? lack of knowledge? well, to be frank, i really don't want to talk about that because that's an open criminal investigation. but i think it's fair to say that this was a group that was a

terrorist-related group or purported to be a terrorist related group. >> rose: all americans. >> all americans. and the key point, really, for those watching this show is homegrown. in other words, american citizens who had become radicalized. and so when we look to prevent terrorism, we have to be thinking not just of those who who are from another country who would somehow get into the united states to do us harm, but those who have actually become radicalized on our own soil. and we've had incidents since 2001, as indeed we had incidents prior to 2001. so the issue is have we done a better job and are we organized better to capture those things before any harm occurs? the answer is yes. but do we have to continue to lean forward? do we have to continue to think in new ways that the attackers could attack, do we have to continue to be concerned about

terrorism and all of its iterations, the answer is absolutely. and one of the key challenges i have as the secretary is, again, this notion of, well, the federal government will take care of it. or complacency. every citizen has a role to play here. >> rose: let me talk about the swine flu. you spoke about that on the council on foreign relations. what ought we know and what are you doing and what's the... why is homeland security finding swine flu under its jurisdiction? >> well, because there's actually a presidential order known as h.s.p.d. 5 which gives the president the power to appoint the secretary of homeland security as the principal federal official in any major natural... any disaster of any type. and that gives the power or really the authority to coordinate to make sure.... >> rose: so something like katrina or swine flu would come under that just diction? >> yes. >> rose: that executive order? >> absolutely.

so this just happened to be the h1n1, the swine flu. and there are lots of things that need to be coordinated. obviously the department of health and human services with the c.d.c. is part of that, has the lead on all the health-related issues, the vaccine issues and the like. but there are lots of other issues. education, for example. we already saw what impact flu can have on school closures. and then when you close schools, what impact that has on the department of labor and how you handle worker-related issues. and so even though that outbreak of h1n1 has receded from the public mind, the plain fact of the matter is people have been getting the flu constantly over the course of this summer. as of june, i think, we had well over a million americans had already had h1n1 flu. and those are just the reported cases. >> rose: how worried should they be if they have it? >> well, again, it has exhibited about the same rate of lethality as seasonal flu.

and the difference... the key difference being that it attacks a much younger population overall. so now we're getting ready for the e ll, school is about to start. school-aged children plus community college university age students prime targets for the h1n1 flu. so a lot of planning needs to go into effect. we need to be leaning forward. what happens if and when this flu circles back around from the southern hemisphere back up here in a more severe form. >> rose: are we prepared? >> yes. we are prepared. >> rose: we have enough vaccine? >> we don't have vaccine. we are prepared in the sense that a lot of these issues that i've just described which sound dry and technical until you actually have to deal with them like for example if a worker shows up at the workplace and he or she has the flu can or should

an employer direct that they go home. >> rose: what's the answer to that? >> well, the answer is going to be it's up to the employer if it's a private employer. but our whole goal here is obviously going to be to reduce the rate of infection, to reduce the rate of transmission to keep those who are sick at home. so we're going to be asking employers to be sympathetic and understanding. and also to be thinking ahead about how much work can be done by telecommuting and the like. >>h 2h0ñ rose: could it=d >> look, here... the way i look at it is preparation is the opposite of fear and the more we prepare, the less fearful we need to be, because the more we prepare, the more we know we can respond to whatever level of whatever happens to come. so we rely on science to tell us what it is likely to happen even though that's a changing environment and in the meantime we work to anticipate the issues

that will arise, to make sure that the plans are in place, that if we have time to actually practice those things so that we know that, look, mother nature's going to happen, we can't prevent that, but what we can do is prepare for it. >> rose: when you look at the range of things that you do, a number of articles i read about you and about the department said this thing: homeland security needs a full articulation of its mission. because a lot of people don't understand its mission. do you agree with that? >> oh, i think that's right. i think there's a lot of education.... >> rose: and how would you define it beyond what we've said already? >> you know, i would take this department-- 22 some-odd agencies and 200,000 plus people-- and i would say we have five major missions. one is the fight against

terrorism. one is securing our borders. and that means air and sea as well as land. one is enforcement of our nation's immigration laws. one is preparing for and making sure we have the ability to respond to natural disasters. and the fifth is to create a one department out of many that people come to rely upon and have confidence in moving forward. >> rose: speaking of the border, your local hometown newspaper the "washington post"... >> i'm starting to think of that as my local home... it's hard to think of it as my hometown paper but i'll give to that you right now. >> rose: they were talking about peace and president calderon and his efforts to do something about narco terrorism which is a border issue. is he going to be successful? should we help him? are we helping him?

what's the responsibility of the united states? >> well, first, i would say it's more than a border issue because those.... >> rose: it's fail state. >> well, i think it's far from being a failed state. but these drug cartels that are operating outside of mexico are distributing drugs throughout the united states. there is virtually no community of any size in this country that their fingers do not get into. so it's not just the border issue. is he succeeding? right now it's what i would call a valiant struggle and we need to help. >> rose: because the outcome is not certain. >> and the outcome is not certain. >> rose: and he's under some criticism for the strategies that he's employed. >> yes. and.... >> rose: on both sides. not enough or too much. >> right. which probably means he's doing it enough. but in any event we're working very closely with him. i am working very closely with my counterpart in mexico. other members of the cabinet are

working closely with their counterparts. >> rose: and what are you doing? >> it's a lot of different things. operationally. for example, we're moving and have moved hundreds of agents to the southwest border. we've moved canine teams and technology. we have instituted southbound checks to see if we can impede the flow of cash and guns into ese drug cartels. there are many other things happening at many other different levels in coordination with our mexican counterparts. but i'll tell you, i've worked this border for a long time. i mean, i was the u.s. attorney going back to 1993, the a.g., the governor of a border state and this is such a unique window for us because the federal government of mexico is fully enengaged in this and so shame on us if we're not there as a full-fledged partner in part because the demand for these drugs and the damage....

>> rose: comes from here. >> well, the demand comes from here and the damage these drugs do hurts all of our communities. >> rose: okay. but how do we can a full-fledged partner? what is it we're doing and not doing in order to become a full-fledged partner? >> well, one of the things we're doing is labeled the merda initiative. this is a bill congress passed. it provides substantial funding to provide equipment, train civilian law enforcement, support the federal government of mexico in these efforts. we're strengthening our owow efforts at the southwest border to impede their traffic. and we're also strengthening our efforts on the sea. because what happens is you start closing off the land border, some of the routes go by sea. that's the coast guard, that's the department of homeland security as well. so all those efforts under way and that's just smart of what we're doing. >> rose: as you know, steve flynn has written a whole number of articles, i'm sure you've read some of them at least. >> i have. >> rose: here's the question steve flynn raised in the

may/june twine issue. is homeland security still on the nation's radar screen? one can be excused for wondering. after all we're heading for the eighth anniversary of 9/11 attacks and so far al qaeda has yet to strikeous again. the technicolor national threat level has been frozen and the new secretary of homeland security janet napolitano has mused aloud that maybe it should be abandoned all together. the issue missing in action during the marathon 20082008 presidential campaign. the transition came and went without the obama administration publicly outlining its plans for the homeland security mission and there was no expressions of outrage or dismay from editorial pages or media pundits. indeed, the only media spark napolitano has managed to generate during the early days of her tenure arose for something she didn't do, she omitted the word terrorism from her prepared testimony before congress on february 25, 2009. >> yeah, i think he's... as is i say, it's being distributive not critical. >> rose: exactly. >> and my response is that it's

very consistent with what i'm saying now which is that complacency is a danger and if... we need to move forward and need to be consistently and constantly looking at our adversaries and one of the purposes of my speech this morning was really the first speech of this station laying out our plans on counterterrorism. pointing out that it can't just be one agency, the federal government, that there are individual roles, and by that i also include the private sector. there are community, state, local, tribal law enforcementing other agencies in the federal government and our international allies all have to be employed. we have to be creating a security network in that regard. so that vision iss out thereow. and the way we do it is under the priorities i already outlined for you. it's the fight against terrorism it's securing the borders, it's

effective enforcement of our immigration laws and it's constantly preparing for any kind of disaster should it happen. so that's the way we're going to get at it. we have advantages we didn't have before 9/11. we have greater use or greater ability of science and technology to assist us in these efforts. partnerships at different levels have already begun and in some places are quite robust. so we have some advantages there we didn't have before. but those are the efforts, that's the strategy and that's the vision. >> rose: if someone in europe and the intelligence arena, a high-standing, would discover an al qaeda or some other terrorist groups effort ongoing plan with perhaps connections in the united states to execute the plan and they wanted to alert the united states government, would the call go to you? >> it might. it could go to several places.

the key thing is that the person who gets the call, do they understand who else they need to call immediately. >> rose: okay, answer that question. do you think they clearly do and wasn't that part of the problem before 9/11? >> yes. it was part of the problem and, yes, there's been great progress there. it's what we call the connecting the dots issue. the dots were there but nobody knew how to connect the dots. i think we're much better at that now and the information sharing environment is much stronger than it was then. but we can't slide back into the old ways. those old silos don't match the threat environment that we exist in now. so it's my responsibility, it's the director of c.i.a.'s responsibility, it's if director of the f.b.i.'s responsibility to make sure that we don't just talk about that sharing in washington, d.c. but that our agents, our folks in the field know that that's what we expectt

of them as well. >> rose: thank you. >> thank you. >> rose: janet napolitano former governor of arizona, former district attorney of arizona, former lawyer in arizona, director of homeland security. back in a moment. stay with us. >> rose: tonight we continue our coverage of the debate about health care reform. we're joined by two people who know the issue of health care from many perspectives. howard dean had been a presidential candidate, born of vermont and chairman of the democratic national committee. before that he was known as dr. dean when he practiced medicine for more than a decade. bill frist was republican senate majority leader for four years until 2007. prior to entering politics he was a heart and lung transplant surgeon. while the two of them represent different parts of the political spectrum, they agree that the nation's health care system needs major changes. i am pleased to have both of them back on this program. welcome. >> good to be with you.

>> thanks. >> rose: here's my start. what should the debate be about for the politicians who vote, for the people in washington who care, and for americans who want better health care. what ought to be the debate? >> i think there's two parts to the debate. first of all, how do you get your economy going? i'm convinced the health care system is one of the reasons america is becoming a second-class power in terms of our ability to compete with other countries. and, two, what do you do about the fact that it's a scandal that a sixth of our population has no health insurance? you fix those two things then you've fixed health care. >> and i would.... >> rose: if you fix the economy, you fix health care? >> in order to fix the economy, you've got to fix health care. you've got to fix the incredible increasing costs of health care. >> rose: and if you fix the economy, you can better fix health care? >> that's right. >> and i would take the economy macro and shrink it down to your viewers tonight and the 300 million people out there that what they're saying is that the

cost of health care for them is going up three and a half times faster than their wages or inflation together. and that they have a fear that they're not going to be able to afford it or they're going to have to drop their insurance coverage. so the cost of health care affecting the security of a family is what they care most about. and then the second issue i'll agree. we've got 46 million people in this country who are uninsured. we can kind of go through that later. about 20 million are really hard core uninsured. you know, 12, 15 million already have a plan out there, 10 or 12 million make more than $75,000 and could pay for it. ten million are not u.s. citizens. but i would say the 20 million people who are uninsured coupled with the cost issue for everybody are the two issues that we should address and today. >> rose: where do you see the health care proposal of the administration that's making its way through the house and the senate and the senate finance

committee and what's happening over on the house side? where is it today and has it lost momentum? >> you know, first of all, it's important for people to understand-- and howard and i were talking about it earlier-- there are three committees in the house and two in the sete. so far we've not seen the health care plan really what it's going to be. so anything we say, the principles are out there. that's congress, and that's where the action is. the president is the cheerleader. i'm not minimizing it, but in truth the president can't control what this body... the united states senate, is doing. >> rose: should the president have presented a plan he wantd? >> it would have made a big difference but he looked back to 1993 and said listen, the mistake of the first lady hillary clinton and president clinton was that they-- a co-equal branch of government-- imposed on the senate and the house a detailed plan and basically that was the downfall. so smartly, initially, i would argue he should have gotten involved a month ago, he basically said "these are the principles, you go write it." well, the "you go write it" part

is where we are now. >> rose: and it will have what consequences, do you think? >> well, first of all, it is very important we address these two issues. we've got to address it. >> rose: cost and access? >> the cost issue to the individual and the access to people who simply can't get health care. people say you eventually get health care... if you're uninsured you do die sooner today. you get less preventative care, you eventually can get into the emergency room but it's more the heart attack or heart transplant instead of treating the blood pressure. so having insurance matters. so those two. right now, i would argue that none of the plans that are out there today adequately address the first, the cost issue. in fact, most of them add cost. and instead of cost being a lot now and going up three times what premiums... it's going to actually push them up even higher. to me that's got to be fixeded >> rose: didn't the congressional budget office say the proposal making its way through was deficit neutral. >> no. no. in fact, the kennedy health care plan ends up costing about... this is incomplete. it costs $700 to $800 billion.

overall cost in its deficit. but that's not really fair because the revenues come in. and the house plan, the last c.b.o. estimate of the waxman plan, the only complete plan in the house has a deficit... creates a deficit $239 billion. now today there's a lot of talk that we've taken care of that. but the only plans that have been written, that have been costed out today that are publicly available all increase the deficit. >> rose: speak to both the political status as well as the cost issue. >> i think... well, i disagree with senator frist about the debt. i think that ultimately... first of all, let me just set this in context. our private health insurance system doesn't work. it's collapsed over the last 15 years. it treats both doctors and patients like dirt. i think one of the reasons the majority of american primary care people doctors favor single peyser because they hate the insurance companies so much. and the insurance company... my wife is treated worse by public insurance companies... private insurance companies than she is

by medicare. when i was practicing, that wasn't the case. medicare was a bigger problem. so this is not just about cost and lack of insurance, this is about how people are treated. you know, there's folks out there saying if there's a government map will, they'll put a bureaucrat between you and your doctor. there already is a bureaucrat between you and your doctor, it's a private insurance industry. so this is about how we're going to shape this system and make it work right. i don't think you can control cost unless the government has a bigger role. i do not think so. medicare's cost have gone up... they've gone up too much because they've gone up less than private insurance has. there's a lot of reasons for that. some of it is cost shift bug medicare doesn't have to pay for big salaries for executives. they don't have to pay for return on equity to their shareholders. they don't have to pay for advertising. medicare also accepts all comers. they don't kick people off once they've got.... >> rose: why not just extend medicare. >> well, that's a good idea. >> it's going bankrupt. >> it's not going bankrupt. >> it's going bankrupt if we don't do anything but we are going to do something. >> but what you're going to do is cut it even further.

you t proposal is going to cut about $400 billion, according to the president, out of medicare and that may say it's not going bankrupt but that means physicians get paid less, hospitals get paid less, home health care people get paid less and if you pay them less, ultimately they won't participate in the system. >> there's a lot of fraud in the health care... >> i agree. and we'll agree that of overall spending, 18% of our economy, probably 20% to 30% is inefficiency. stuff you can wring out of the system and i think the real question question is do any of these plans wring it out of the system. and some good things but some not so good things. but i think the answer on medicare is important because medicare has failed. it's a great system and plan and i agree. administrative costs are less and it's good. it's predominantly a fee-for-service system that drives up the health care costs today because it means you do more procedures. and it is... you may say it's not, but the actuaries tell us it's going bankrupt in eight years.

so before putting another trillion dollars into it, you want to fix the system. >> rose: let me make sure i understand this, too. do you... where do you think the politics are? is it, for example, thereby a bill but a lot of people who care for public option, things like you, are going to be hugely disappointed? that's the political reality? >> i don't think so. i honestly believe republicans don't want a bill because i think demint really spoke for the republican party more than they'd admit. i think you're going to get a decent bill in the house. the blue dogs have made an agreement. i think it's improved the bill and the two committees have passed it, now waxman will pass it and we'll get a decent bill in the house with the public option. but the public option will be... look more like a... it will be more competitive. they won't have any unfair advantage, they'll pay doctors better and i think that's probably an improvement in the bill. in the senate, i honestly think the finance committee is going to implode and there won't be a bill and therefore it will go to reconciliation. >> rose: you should know, senate majority leader.

>> poor harry reid. he's having a tough time. first of all, we will see a bill before november. and the bill will pass and president obama will sign it. >> rose: will it have republican support? >> i don't know, because what howard says, it's going to reconciliation. and once you that, you're basically saying we're cramming this thing through with 50 votes. so by definition you're excluding republicans. and if i basically said "i'm not going to talk about the debate" you're probably going to vote against it no matter what it is. so i don't know. anani would encourage... the reconciliation for the viewers means instead of using a 60-vote threshold in the senate which forces bipartisanship, forces the discussion, once you send a signal... and the majority leader does it. harry reid now, with obama basically saying do it. you're going to lower it to 50 vote. and when you do that, it takes away all chance of people working together. >> that's how bush's tax cuts

were passed. >> that's right, but i did the same thing with the medicare modernization act six years ago, a $400 billion, big bill, prescription drugs and i refused to use the 50-vote threshold. i'll just comment quickly. think the house will write the bill, pass the bill for sure. i think it will be a bad bill. >> rose: bad bill because it will have what? >> because it won't slow the growth of cost over time. basically howard, this is where we disagree. he thinks the government comes in and squeezes and controls it and i believe fundamentally that markets will work if we have better data, more transparency, more accountability. knowing what you're getting when you're going to see a doctor, which people don't know, and you're using some of your money to buy it. and that's the difference, i think, mainly between us. >> rose: and you believe public option is necessary in order to make insurance companies more competitive? >> the insurance companies are terrible to the people who get their insurance policies, many of them. not all of them. if you work for i.b.m. or microsoft, you've got a great insurance policy. it is a little tough on i.b.m. and microsoft because the cost is going much faster up than

your competitors in germany and france and so forth. but if you're in the individual market, the kind of abuses that patients have to go through, it's a testimony in theeouse about three weeks ago that the three largest health insurance companies in the country have cut 0,000 people off their rolls using technicalities in order to bring $300 million of profit down to their bottom line. that's not health insurance, that's just doing what's going on in wall street for the last 15 years. you can't have that kind of stuff. what the public plan does is guaranteed community rating, low administrative costs, available wherever you are whether you have a job or not. it forces the private insurance companies to compete. and i think that's good. and they can't keep treating their consumers like that if there's another option. that's the purpose of the public plan. >> rose: is the public plan a problem for you? the public option? >> first of all, i'm for reform. it important for you to know. we'll both get pigeon holed a

little bit overall. and i think one of the good things in all the obama bills is reform of the insurance industry. i think it's one of the most positive things and that is to eliminate cherry picking. to eliminate if people lose their job being thrown off in the roles to the vultures out there. so guaranteed issue, pre-existing illness, all that kind of reform is good stuff. and it's in these bills. the problem is you've got all this other stuff in the bill. so the insurance has to be reform. i automatically agree. the public plan boils down to this. i didn't do in the 2003, a $400 billion bill for prescription drugs and all and we didn't need a public plan. we did have a public plan as a backup if you could not regulate the insurance market and it ended up there were plans for all 40 million people. thus what i would do if i were the senate-- and i think the senate can write a good bill cans is say yes, you may need a public plan as a backup if the private sector doesn't work. that public plan can be three kinds. it can be the nationalized sort

of single payer medicare like plan. the american people probably aren't going to take that, but some people will like it and the house will probably pass that. a state-run... an administrative type plan or it can be something local which is much more of a collaborative cooperative which is really hot right now in the senate. i think if you get a locally run not a nationalized plan that is a cooperative as a backup, you can have a public plan there. and it can accomplish everything that the democrats or president obama wants. >> i don't think so. i think that's... that approach has been tried in the past and bill gave an example where he thought it had worked and i do think the health care plan you passed, the drug plan, worked much better than the democrats thought it was going and i give you that. but it also hasn't worked in other areas. what i think is, you know, medicare's pretty popular right now and it works pretty well. why not let people sign up for medicare if they're under 65 years old. why? >> rose: the president constantly refers to that we're

not going to... if you want to intain your present system, you can. nothing we're going to do... >> exactly. >> rose: does that get lost in the debate? and the fear of public option is that somehow it means that the way you, a an individual, go about getting medical care will be dramatically different? >> well, that's the insurance company shtick is god knows we're going to have socialized medicine. we've had socialized medicine for 44 years. medicare. >> rose: >> socialized medicine is not medicare. socialized medicine is you own the hospitals, you own the doctors. it's single payer. the v.a. is. the v.a. is socialized. >> so we've had socialized medicine. >> do you want to go to the v.a. where you're limited in terms of the drugs you have, the prix procedures enough? the v.a. is a great system and the quality compared to when you and i started is unbelievably good. they have electronic health records. >> but why do republicans keep talking about socialized medicine if medicare is not socialized medicine. >> you don't hear me talking

about it. >> you don't.. >> but the public plan, i think it's worth thinking about and the house will probably pass it and you're right, grassley and baucus will not because it's not where the american people are. >> i think it where's they are. 7% of them would like the choice including 50% of the republicans. choice is the kekeword. >> why doesn't grassley and max baucus, chairman of the finance committee and the minority member go along with that idea if they think the public is there. >> 72% of the public want the choice. >> rose: why don't they go along with that? >> i'd like to know that myself. >> the public plan is... this is where the republicans are and i've told you where i am. you have a system out there that gives a lot of tax advantages to the employer-sponsored private health plan. you have 26 million people who are out there who don't have insurance. you set up a public plan, these people can choose from the private or public plan. the problem is the public plan is a nationalized singer payer system. it will pay doctors 20% less than these private people are paying. >> not according to the house. not according to the blue dogs

amendment. >> let me finish. >> okay. >> so you're paying hospitals 20% less, hospice 20% less, home care. that's where medicare is today. medicaid is even less than that as we both will agree. and so what happens there, you're offering the same benefits to these people, their choice, for 20% less, really the same thing. now people say that's good because that causes competition. these 160 million people over here who are in employer sponsored plans, the employers are going to say "listen, for a little bit of f ney i can dump my patients out whereof they're getting this choice into this public plan because it's cheaper for me." and therefore instead of being ten million people, it grows to 20 million people to 30 to 40. the 160 million people out here who have choice in private plans don't have that choice. so once you get stuck in the public plan, you really have no choice. you can't go back. >> that's not so. >> i'm saying... >> that's not so. that's not what the bill says. the bill says... the house bill says you can't get out of your employer-based plan.

that's a... you don't have a choice about that. >> unless you're in a small business. >> after five years the whole system goes away. i'm not saying it's going to happen. >> c.b.o. says it's not going to happen. >> c.b.o. says they don't think. but the fear is as you go into this large public plan, the big bad private insurance industry disappears, they get smaller but then when you're in the public plan, everybody is being paid less and with that you're locked into it so you have less choice and there's less innovation and less technology and there's more-- and i'll use the bad word that president obama did-- rationing. >> that is unfair to talk about that. >> i'm saying it's a rational. >> they may be the rationale. we spent more at our g.n.p. than anybody in the world. we're at 17%. canada and britain is 10%. so there's 1770% you can squeeze out. >> i would say 30%.

>> secondly, what the bill says and the blue dogs just negotiated is you cannot pay the medicare rate. now it's going to be part of the house bill. you cannot pay doctors medicare rates. >> so you pay them... first of all, medicare is here, private insurance is here, but you can't pay medicare so you pay medicare plus a few percent? >> sure. >> but still you're going to have the flow of people coming into it. probably >> well, it may result i i havig insurance premiums that would go down. which have gone up 2.5 times the inflation. >> i agree. so so maybe it's not bad to have squeezing down. >> is it your hope... >> met me say one more thing. >> where do you want to go with this? >> let me finish one last thing. every country in the world that has so-called socialized medicine or whatever you want to call it, you say it's not socialized medicine, okay. every country in the world in the western industrialized world also has private insurance. even in britain which is really socialized medicine, 15% of all the health care dlas are private dollars. so the idea that we're going to

squeeze out public insurance is never going to be a choice again i think is wrong. there's no evidence of that what is over. >> but it may go from 100% of employer-sponsnsed market down to 30% with all of that going into the public plan. you say that's good because the public plan has less administration costs. i say it's bad because it's less innovation and less choice. >> i would like to see a public plan co-existing with the private plans. i think the private plans will treat patients better, treat doctors better and if people think the public plan is inefficient, they'll move back into a private plan. >> look, the health insurance industry is not run by a bunch of dumbos. you may not like them, but they're smart and they can make money any way they can by filling niches. medicare is a one size fits all program. and there are people who don't like it, a lot of people do. so there's going to be other insurance you can get and most people who have medicare have supplemental insurance that pays for pharmaceuticals. >> rose: this may be apparent but if, in fact, all the doctors in america could vote for the kind of health care reform they want, what would they want?

doctors? >> it would be... >> there's controversy about that. >> i think it's a good question. i've never answered it. >> and i don't think either one of us know it is answer because i don't think anybody know it is answer. >> i do think... one of the things... and this is where the obama approach, moving towards value is very good. first of all the information technology is great stuff. i think moving towards value instead of volume reimbursement, the more procedures you do, the more medicines you prescribe, the more heart transplants you do, for t more clinic visits you do, the more imaging you do, that's the way our system is, fee for service. and when things get tight and you don't pay doctors very much, i'm not saying they do it, i know the president got in trouble for implying that, but at the end of the day instead of seeing a patient every two years you can see them twice over that period of time. so we have a... we're a volume driven system today because of fee for service instead of an out come results oriented condition driven system for reimbursement. so we need to reimburse people

for value instead of just volume. >> rose: one question about the politics of it. if i understand where you are, you would like to see the democratic party push through and use whatever reconciliation or whatever they need to do, be damned the republicans... >> because i don't think there's >> rose: but damn the republicans, get health care reform as you would like to have it. >> just like medicare. >> rose: just like medicare with a public option and get it passed and that would be the way to go. that's what you would like to see. stop trying to satisfy the republicans with their objections. >> who don't want to be satisfied. >> rose: fair enough. >> if i thought the republicans were sincere, i wouldn't take this position. >> rose: fair enough. you believe that if, in fact, they do that and go to the country in 2010 and in a congressional election year they'll get, what? killed? >> i think it goes back to with what howard opened with. i think it's fiscal suicide for the united states of america to pass a bill that all of a sudden says we're going to have $1.6

trillion into a system now that is broken without doing anything to control the cost over time. and i think that's what these bills are. i'm for reform. i think a bill will pass, should pass. and i think it needs to do the good things that we've talked about, a value driven outcomes based system that is consumer driven, driven with markets to bend that cost curve instead of the governrnnt squeezing from above. >> rose: should benefits be taxed? >> and a public option as a backup that is locally run and not run by the federal government. >> rose: should benefits be taxed? >> well, the issue there, again for our viewers, is the employer-sponsored a a free ride that is very regressive. rich people get a huge tax benefit who are working for an employer and the individual markets out there, the millions of people out there who don't get employer-sponsored get no tax advantage whatsoever. we feed to equalize that. so what i do think is that we ought to tax the very rich plans out here and make them a part of wages themselves, whether you pick up $100 billion or $150

billion, take that, have refundable tax credits to empower individual choice in the individual market instead of a nationalized medicare like single payer public plan. >> well, first of all, i think that's very dangerous. that's exactly why i think the obama plan is better than what the republican plan is because that would drive people out of the employer-based system. and i think we probably agree that the employer-based system probably hurts the economy in the long run. but in the short run, most people like the employer-based system and most employers, much to my astonishment, like the employer-based system. i think it's a mistake to drive them out of the employer-based system. you're afraid they'd leave voluntarily, i'm afraid the government will push them out if we adopt a plan you suggested. whatever we do, we can't do it too fast. this is a country ha doesn't... they say they like more change than they want. and you can't push them too fast. and that's the genius of obama's plan is we will get reform if you have a public option because the american people will choose the rate at which that change

takes place by making individual decisions. >> rose: one last question on politics. if there is no public option in the democratic plan, will the left of the democratic party rebel against t e president? >> i hope so because it shouldn't be passed. it's a waste of money. >> rose: in other words, the public optioning... without public option you should not have health care reform. >> you should have insurance reform. there is no health care reform without a public option. the figure is not 1.6. i think c.b.o. scores one bill at $600 billion and one bill at $800 billion. it's a hell of a lot of money. and i don't think you ought to pour $800 billion into the present private health insurance system. you're just giving more money to the people who screwed it up in the pirs place. if you're going to give americans a real choice and let them choose reform, then it's okay. but if you're not, here's what you ought to do. you ought to pass community rating as bill was talking about, we all agree with that. do the insurance reform. we did this 15 years ago in vermont. >> i agree with that. >> it doesn't cost anything to do with that. >> thank goodness. >> so if you're not going to

have a public option, don't pretend you're doing health care reform. that's what presidents of both parties like to do, they like to sign a bill and say they've had a big victory. it isn't going to do anything. do the insurance reform, take the money out of it and call it a day. you've made an improvement in people's lives, we'll do it another day. >> and the president will take that as a victory. >> i'm optimistic, i think we'll pass the bill with the public plan. >> rose: thank you, you have to host the keith olbermann show and i thank you for stopping by. are you going to run for president again? >> i think it's unlikely but never say never in politics and i think senator frist.... >> rose: i was going to ask you the same question. >> i'm out for good. i'm not running for any elective office, governor or president or cabinet position. i'm out of politics for good. >> but we keel keep working. this is important stuff. >> rose: thank you. i have in front of me howard dean's "prescription for real health care reform, how we can achieve affordable medical care" i suspect some of the ideas in

books you have just heard. >> and it's in english. >> rose: thank you for joining us. see you next time. captioning sponsored by rose communications captioned by media access group at wgbh access.wgbh.org