President Obama's Health Care Summit Convenes
for February 25, 2010 - Full Episode Transcripts
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TOM HUDSON: More clashes than consensus today in Washington Susie, the issue on what to do about health care reform. President Obama played host and referee really between Democrats and Republicans at a health care summit and you know it's being called historic tonight.
SUSIE GHARIB: You're right about that Tom and they talked and talked for over seven hours. The debate was intense, but it was also civil. Everyone seemed to agree on the high cost of health care, but they didn't come together on how to reform the American health care system.
HUDSON: As the president wrapped up that marathon session late in the afternoon, he said that there's no time for another year of debate on the issue and he urged Republicans to re-think their opposition.
PRESIDENT BARACK OBAMA: I'd like the Republicans to do a little soul-searching and find out are there some things that you'd be willing to embrace that get to this core problem of 30 million people without health insurance.
HUDSON: He made it clear in the day Republican Senator Lamar Alexander made it clear that his party wants to start over with a different focus.
ALEXANDER: Make that our goal, reducing health care costs and start over. And let's go step-by-step toward that goal.
GHARIB: While the debate played out in Washington, what was the reaction in the rest of the country? We watched the summit with two people who are impacted by what happens next in healthcare: the chief medical officer at the University of Miami health system. He oversees one of the largest hospital systems in the country and also a small business owner in Chicago. Did they hear what they wanted to hear today? We begin with Diane Eastabrook in Chicago.
DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: For Abt Electronics and Appliances, health care is the company's third highest cost, just behind labor and inventory. That's why owner Mike Abt watched today's health care summit with rapt attention in his store's home theater section.
MIKE ABT, OWNER, ABT ELECTRONICS & APPLIANCES: I care about my employees a lot, but I care about my customers. And if they don't have insurance, they're not going to be able to buy as much.
EASTABROOK: Abt offers health and dental insurance to all of his more than 1,000 workers. Some employees opt out in favor of their spouse's plan and only a small percentage decline his coverage. Those workers concern Abt. Still, he's skeptical about mandatory health insurance for everyone.
ABT: This is America. We should have a choice. But the people who don't have health care, a lot of times, costs us so much money. You know, everyone is allowed to go to an emergency room and get treatment and that costs more than any doctors' little clinic that you're going to visit. So I don't think we should force people to do anything, but it is a problem.
EASTABROOK: Abt also worries about insurance premiums rising too high and about employees being denied coverage for pre-existing conditions. Abt is encouraged about today's summit, but he says what he finds really troubling is that missing from all of this dialogue about health care reform is the issue of illness prevention.
ABT: We opened this when the store was built back around 2000.
EASTABROOK: All Abt employees can use this on-site gym with weight machines and treadmills at no cost. Abt realizes not every company can afford something like this, but he thinks more can be done to encourage Americans to eat better and live healthier lives.
ABT: It's easy to look at an illness and treat it and deal with it and give medicine and all of that costs a lot of money. But to have people taking care of themselves, eating right, doing fitness stuff, that is really what will save our system, I think.
EASTABROOK: ABT thinks Congress will pass health care reform. He's just not sure what it will look like.
ABT: I'm just a TV guy, but I absolutely think something should happen. Maybe they'll just do a little bit, but hopefully they'll do a lot.
EASTABROOK: Diane Eastabrook, NIGHTLY BUSINESS REPORT, Glenview, Illinois.
JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: This is Jeff Yastine in Miami. We watched the debate with Dr. William O'Neill, chief medical officer for the University of Miami health system.
DR. WILLIAM O'NEILL, CHIEF MEDICAL OFFICER, UNIV. OF MIAMI HEALTH SYSTEM: The thing that really depresses and startles me is that you don't have any doctors in this discussion. You don't have any hospital administrators. You don't have any insurance reps. You don't have any patient advocates. Those are the people that are really involved. We're not in the debate. We're just sitting on the sidelines, watching the rest of our future and the rest of health care kind of being decided in front of our eyes. The other thing that these guys aren't even talking which is again really infuriating is they're not talking about malpractice reform. Defensive medicine costs this country easily $500 million over five years and they're not doing anything on that. So why don't we be real and have a real honest dialogue? If this country can't afford that much health care, than we're going have to have a method of being able to figure out what we really need and can afford to pay for.
YASTINE: What happens if there is really no movement at all on health care reform? What happens for your hospital system?
O'NEILL: Well, we'll figure out a way to cover. I mean a lot of the cost shifting that goes on, you start, continue to increase charges to insured patients. And insurance premiums would continue to go up. And we're going to continue to struggle with the uncompensated care.
YASTINE: Dr. O'Neill oversees a hospital system that serves more than 400,000 patients a year. But he has personal worries over the nation's heal care direction. His own daughter has a life threatening preexisting health condition. She has to choose jobs based on whether the employer's health plan will accept her.
O'NEILL: It means that's no good in this country. Nobody wants that. We have to figure out how we can cover people that don't have insurance. I mean that's a huge problem. And we do have to do something about the cost. And I hope that we can get some of those things done, then we will have a much better program. Again, we're going to wait and see what happens.
SUSIE GHARIB: More reaction to today's health care summit, this time from the next generation of physicians. Ana Olson spoke with some future doctors who are weighing the pros and cons of health care reform against the investment they're making in their education.
ANA OLSON, NIGHTLY BUSINESS REPORT CORRESPONDENT: George Washington University medical student Jason Goldberg has invested countless hours of study and over $100,000 to get to where he is today. He's a fourth year med student studying pediatrics. Goldberg thinks if patients want treatment, health care reform will have to pay doctors fairly.
JASON GOLDBERG, GWU MEDICAL STUDENT: We invest a lot into our careers and we have to make sure that we're getting compensated for the care that we provide so we can continue to provide care for our patients.
OLSON: Goldberg thinks the government will eventually end up taking over health care. If that happens, he's counting on lawmakers to keep future physicians out of debt.
GOLDBERG: I think we will see a day where medical school tuition will be subsidized by the government.
OLSON: His classmate Erik Smith has less faith in Uncle Sam's ability to protect his pocketbook. He says the health care reform plans he's seen so far are troublesome.
ERIK SMITH, GWU MEDICAL STUDENT: I'm concerned that medicine might change into something that's just not a realistic career choice for med students.
OLSON: Smith is training to become an emergency room doctor, at least for the time being.
SMITH: If emergency became a specialty where I just realistically couldn't pay off my loans, then I would have to reconsider.
OLSON: At a clinic inside a community center called Bread for the City, GW students treat the underserved. Students like Emily Cotter say maintaining the status quo is not an option.
EMILY COTTER, GWU MEDICAL STUDENT: Insurance and access to having a primary care doctor is huge.
OLSON: Cotter hopes to work in a community-based health center after she graduates. She says general practitioners aren't paid enough. She'd like the legislation to include more incentives to go into primary care.
COTTER: I do worry about burnout. I think a lot of primary care doctors go into the field with great ideas and ideals and to have to see so many patients in a day just to make ends meet is really difficult.
NISHA VARADARAJAN, GWU MEDICAL STUDENT: I'm not going to do it for the money, because I don't want to be miserable for the rest of my life.
OLSON: Nisha Varadarajan believes health care is a human right. She'd be willing to be paid less if it meant other people could have access to treatment.
VARADARAJAN: I came into this profession for a reason to help people.
OLSON: For these medical students, it's not all about the money. But the reality is, they pay a high price to become a doctor and need some assurance they can still afford to practice medicine. Ana Olson, NIGHTLY BUSINESS REPORT, Washington.
Interest Rate Impact on Stock Investors
SUSIE GHARIB: As Tom just said, that stock sell-off today was partly because of new concerns about the debt crisis in Greece. Government regulators are looking into how big banks and Wall Street firms, including Goldman Sachs, helped Greece disguise the size of its budget deficits. The Federal Reserve is conducting its own investigation. And Fed Chairman Ben Bernanke told lawmakers at a Senate Banking hearing today that he's reviewing Goldman's derivative swaps with Greece.
BEN BERNANKE, CHAIRMAN, FEDERAL RESERVE: Obviously, using these instruments in a way that intentionally destabilizes a company or a country is counterproductive and I'm sure the SEC will be looking into that. We'll certainly be evaluating what we can learn from the activities of the holding companies that we supervise here in the U.S.
GHARIB: At that same hearing today, Bernanke repeated the same message he told House lawmakers yesterday -- he does not plan to raise interest rates anytime soon. So, if interest rates remain at historically low levels for many more months, what does that mean for stock investors? Suzanne Pratt asked some market pros for their opinion on that topic.
SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: When Federal Reserve Chairman Ben Bernanke talks, Wall Street always pays close attention. That's because there's an inverse relationship between Fed policy and stock prices. Tighter money usually means stocks move lower, while easy money generally equals higher stock prices. So, if Bernanke and company keep the Federal funds rate historically low for at least another six months, that should be good for stocks. Jefferies strategist Craig Peckham agrees, forecasting low double-digit returns for the major averages this year.
CRAIG PECKHAM, EQUITY STRATEGIST, JEFFERIES & CO.: I do expect, though, that the first half of 2010 will be an easier environment for stocks to work well, largely because I think the threat of interest rate hikes are probably off the table until we get into mid-year.
PRATT: History shows the half year before the Fed starts to raise rates is a sweet spot for stocks. According to Standard & Poor's, since 1946, the S&P 500 has gained on average nearly 10 percent in that six-month stretch. That's much better than the six-month average gain of 4 percent. In an effort to repair the U.S. economy, the Fed has kept rates close to zero percent for more than a year. Those low rates also helped stocks post serious gains last year. But market pro Stephen Wood says a repeat of the 2009 stock market rally is unlikely, even if policymakers leave rates unchanged all year.
STEPHEN WOOD, CHIEF MARKET STRATEGIST, RUSSELL INVESTMENTS: Given all the challenges and all the headwinds that the market is facing, this could allow the stock market to be range bound but a little bit better than many investors might be expecting.
PRATT: Others say investors need to pay close attention to why the Fed is keeping rates so low.
PECKHAM: If the economic data stream evolves such that it looks like the sustainability of this recovery comes into question once the stimulative impact is removed, than I think it becomes a harder bull case to make for stocks.
PRATT: So, what happens to the stock market when the Fed starts to raise rates? It's not as bad as you might think. Historically, stocks on average gain close to 3 percent in the six months following the first rate hike. Suzanne Pratt, NIGHTLY BUSINESS REPORT, New York.
SUSIE GHARIB: At today's congressional testimony, the Fed chief weighed in on China's large holdings of U.S. assets, saying they could pose a risk to our financial system. Ben Bernanke suggested we'd be better off if China saved less and we saved more. Tonight's commentator is also worried about our largest trading partner. He's Leo Hindery, managing partner at Intermedia Partners, and chairman of the U.S. economy smart globalization initiative at the New America Foundation.
LEO HINDERY, MANAGING PARTNER, INTERMEDIA PARTNERS: America's great recession has turned into China's great opportunity. American companies have cut both their payrolls and their capital spending and have driven business to China at the very same time that Chinese manufacturers are boosting their global competitiveness through massive subsidies from their central government. In just the last year, China's share of our nation's trade deficit in manufactured goods jumped from 69 percent to an almost unbelievable 80 percent today, while its share of U.S. imports overall increased 20 percent. No responsible American economist disagrees with President Obama's assessment that China's currency is significantly undervalued compared to the U.S. dollar. Yet currency manipulation is actually just the tip of the Chinese trade iceberg. Something on the order of 90 percent of China's domination in manufactured goods vis-a-vis the U.S. is due to its subsidies to manufacturers and to its extremely low environmental standards. The Obama administration and Congress must consider a host of responses, including going after all of China's illegal subsidies, not just its currency manipulation, adopting buy American requirements related to all Federal government procurement by the United States and reviewing in advance proposed investments in companies and technologies critical to our nation's success. We're in the grips of a major economic and unemployment crisis made much worse by the bad behavior of one of our largest trading partners. It's way past time that we do something about it. I'm Leo Hindery.
Market Focus with Tom Hudson
TOM HUDSON: Some worries about Greece's economic stability did pressure stocks early today. The blue chips in fact down over 150 points in the early going. Wall Street though managed to trim these losses by the closing bell as you can see. The Dow fell at the bell down by 53 points, the NASDAQ down 1.5, the S&P 500 off by two.
In fact it was transportation stocks really helping pull the major indices back from that steep sell-off earlier in the day down by more than 150 points. Let's take a look at this exchange-traded fund (IYT) that follows the Dow transportation average. It saw leadership from railroad and trucking stocks which may have been helped out oil prices today falling below $80 a barrel. That in turn was helped out by the dollar falling in price. And you know that when the dollar drops, usually you see gold prices move and that certainly was the case today. Gold went out just above $1,100 an ounce, a nice rally in the yellow metal, but firmer gold price also helped out the stocks of gold miners, included in this gold miner exchange- traded fund (GDX) up by better than 2 1/2 percent. Gold stocks and gold prices as you can see though have been trending lower since early December. Newmont Mining (NEM), the second biggest gold miner saw a huge profit jump, easily beating estimates thanks to the higher price of gold and copper. Gold revenue up 55 percent. But get this, copper sales a 10-fold increase in the past quarter. The stock saw twice its normal volume today, rallying to its highest price since mid-January. Newmont stock has performed better this month compared to the overall gold miner sector.
Some after-hours action to get you caught up on this evening as it may carry over to tomorrow's early session. Shares of the Gap (GAP) were up as much as 2 percent at one point after the bell, profits jumping 45 percent. The company also announcing a dividend increase and a $1 billion stock buyback program. Now ahead of these results, Gap stock was up fractionally during the regular session on good volume. The stock has been slowly climbing since hitting that five month low back earlier last month.
The drop in Fluor (FLR) stock accelerated after the bell tonight. The construction management company down by as much as 6 percent after the close, blaming a disappointing 2010 forecast there. Palm (PALM) stock was one of the most actively traded issues today, volumes coming in close to 100 million shares. Take a look at the stock chart. You can see it fell out of hand, 20 percent almost to the downside. The handset maker warned that it will miss earnings expectations by a wide margin. It says it's just taking longer than anticipated for consumers to buy its newest products.
Speaking of technology, Apple (AAPL) is not giving any hints today about how it wants to use its big cash hoard. At today's annual shareholder meeting, CEO Steve Jobs said its $40 billion in cash gives Apple flexibility and security. It certainly does. Apple stock saw a small gain today. It does not pay a dividend and the company has resisted calls for a stock buyback program.
A couple of other noteworthy moves on earnings today to get you caught up on as well. Generic and branded drug maker Mylan (MYL) beat estimates on the back of a double-digit increase in international drug sales, a $0.03 beat (ph) there. The stock did almost five times volume on today's rally, jumping to its highest price since the spring of 2007. Auto parts supplier TRW (TRW) meantime roared to a new 52-week high, up by better than 7 percent on heavy volume. Again, much better than expected fourth quarter results here and a big positive note with management projecting first quarter results well ahead of expectations. Coca-Cola (KO) helped the lead the way lower for the Dow throughout the day. Investors selling after the company announced that $15 billion buyout of its North American bottler, Coca-Cola Enterprises. Some details on the deal will give Coke control of about 90 percent of its sales volume in North America. It essentially is a cashless transaction here, Coke taking the bottler's debt and pension obligations and it follows Pepsi's (PEP) buyout of its two bottlers, which is actually expected to close tomorrow. These deals give the software, soft drink giants rather more control over their supply chains in the United States, where finding sales growth has been very difficult in quarters past and this is why the new focus may be on sales price instead of sales volume.
KAUMIL GAJRAWALA, ANALYST, UBS: I think the focus is going to be a lot more on revenue as opposed to volume. If you think through the '80s and '90s, there's been price wars. I think now it's going to be a bit the opposite. They'll focus on total price of the product. They'll focus on revenue management, but not necessarily on market share and on selling large amounts of volume. This could be good for both of the companies because at the end of the day, carbonated soft drinks are very affordable and most of the years of the last 25 they've lagged inflation in terms of pricing.
HUDSON: Now Coke stock saw big volume on the deal and a stiff sell- off. Over the past year, KO shares up by about 26 percent, pretty nice return. Competitor Pepsi fractional buying but it slightly under-performed Coke actually over the same time period up by 23 percent. The immediate winner beyond Coca-Cola Enterprise certainly may be Dr. Pepper (DPS) here. Both Pepsi and Coke distribute Dr. Pepper and as both Pepsi and coke bought their bottlers, Dr. Pepper now gets to re-negotiate those deals. It got a $900 million deal when Pepsi did its bottler buyouts. DRS (sic) tonight at a new all-time high. Overlooked may have been Dr, Pepper's earnings in all this, coming in a penny better than expected by the way.
And that's tonight's Market Focus."
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