QUICK: Welcome back to SQUAWK BOX on CNBC. Good morning again, everyone. I'm Becky Quick and I am in Omaha, Nebraska, this morning at Piccolo Pete's restaurant. This is Warren Buffett's favorite eatery. Joe and Carl, of course, are holding down the fort back at CNBC headquarters. They've been playing in on this whole interview as well. And for the next two hours we're going to be speaking to the man himself, Warren Buffett, Berkshire Hathaway's Chairman and CEO. We've gotten a lot of ground covered already. But, Warren, we'd like to change the focus a little bit.
BUFFETT: Sure.
QUICK: We've covered ground looking at the economy and where things are headed. We've talked a little bit about Coca-Cola. What we have not touched on yet is where the government stands right now. We--you mentioned briefly about the jobs report, but there are so many other bills that are moving through that have captured the people's attention, including the health care bill and...
BUFFETT: Yeah. Or not moving through.
QUICK: Or not moving through. Nancy Pelosi said at this point she does not think that there's going to be any bipartisan support. What do you think about the idea of taking this into reconciliation and cramming it through?
BUFFETT: Well, the health--the health situation, what we have now is untenable over time. I mean, it--call what we're doing now plan A, and plan A has taken us from 5 percent of GDP to 17 or close to 17 percent of GDP. And that kind of a cost compared to the rest of the world is really a--it's like a tapeworm eating, you know, at our economic body. Every--everything we produce for export, everything we compete with that comes imported in this country, everything is bearing that cost, and it's a cost that the rest of the world isn't bearing. And the--tops around the world, you find 10 percent of GDP. We have fewer doctors than many--we have two and a half--a little over two and a half doctors per thousand, much of the world has well over three doctors. We have 11 nurses per thousand, much of the world has far more nurses per thousand. We have three beds per thousand, hospital beds per thousand, much of the world has six or seven beds per thousand. We have higher infant mortality than most places, or many places. We have higher--we have shorter overall mortality. So we have a health system that, in terms of costs, is really out of control. And if you take this line and you project what has been happening into the future, we will get less and less competitive. So we need something else. Unfortunately, we came up with a bill that really doesn't attack the cost situation that much. And we have to have a fundamental change. We have to have something that will end the constant increase in medical costs as a percentage of GDP.
QUICK: Then are you in favor of scrapping this and going back to start over?
BUFFETT: I would be--if I were President Obama, I would just show this chart of what's been happening and say this is the tapeworm that's eating at American competitiveness. And I would say that one way or another, we're going to attack costs, costs, costs, just like they talk about jobs, jobs, jobs in the...(unintelligible). It's cost, cost, cost on this side. That's a tough job. I mean, we're spending maybe $2.3 trillion on health care in the United States, and every one of those dollars is going to somebody and they're going to yell if that dollar becomes 90 cents or 80 cents. So it take--but I would--I would try to get a unified effort, say this is a national emergency to do something about this. We need the Republicans, we need the Democrats. We're going to cut off all the kinds of things like the 800,000 special people in Florida or the Cornhusker kickback, as they called it, or the Louisiana Purchase, and we're going to--we're going to get rid of the nonsense. We're just going to focus on costs and we're not going to dream up 2,000 pages of other things. And I would say, as president, `I'm going to come back to you with something that's going to do something about this, because we have to do it.'
QUICK: Just focus on cost, or focus on cost while insuring more people? Those are two different problems.
BUFFETT: Well, yeah, universality, I--no, I believe in insuring more people. But I don't believe in insuring more people till you attack the cost aspect of this. And there is no reason for us to be spending 17 percent or thereabouts when all--many other developed countries are spending, we'll say, 9 or 10. They have more beds, they have more nurses, they have more doctors, they even have more consultations by far. We have about four consultations per person in the United States with doctor interaction per year. Other countries have far more than that. I mean, we spend a lot of money on equipment here. I mean, if you want to get the very best, I mean, if you want to spend a million dollars to prolong your life another three months, you know, in some coma or something, you can probably do it better here in the United States than any place else. But we need a fundamental reform. And, you know, I admire people for tackling it, because it's so tough politically. But I would--I would like to see them really get the job done.
KERNEN: But I--can I follow up, Beck?
QUICK: Wait a second. This is different than what you've said--hold on one sec, Joe.
KERNEN: All right.
QUICK: This is different than what you've said when we've talked to you in the past. I mean, even a couple months ago when I sat down and talked to you, you said that you would vote, I believe, for the bill if it were in front of you.
BUFFETT: I--if it's a choice...
QUICK: When did you change your mind?
BUFFETT: No, if it was a choice today between plan A, which is what we've got, or plan B, what is in front of--the Senate bill, I would vote for the Senate bill. But I would much rather see a plan C that really attacks costs. And I think that's what the American public want to see. I mean, the American public is not behind this bill. And we need the American public behind the bill, because it's going to have to do some tough things. But in--if it doesn't bring down costs significantly--and you can say, well, you're bringing down costs by raising a tax over here or cutting--improving Medicare, but you can do those things anyway. That's got nothing to do with what's being proposed in the bill. So I--if the only choice I had in the world was the present system or the present bill, I would take the bill. But I think it'd be far better to say cost is it. We're going to go back and we're not going to come back to the American people until we have something that is going to take this 16 or fraction and it's going to bring it down somewhat toward what other countries are doing. Because otherwise, you remember when the auto companies said, `We've got $1500 of health care built into a car'?
QUICK: Right.
BUFFETT: You're not going to sell cars against other people if you've got $1500 of extra costs. But you're not going to sell airplanes from Boeing and you're not going to sell all kinds of things if you have this huge cost which only the United States is incurring. We are not going to be competitive worldwide.
QUICK: Joe:
KERNEN: Yeah. Well, that--I was going to look at the--sort of the corollary of what you were saying, Warren, and that is if you look at the way that costs are rising now with Medicare or with some of the other entitlements, if you meet--what would be the consequence of adding 30 million people before you address a system that's already broken?
BUFFETT: That's why you want--you want to address costs. I agree with you. But I do think--you know, I--and maybe the very fact that 30 million more would be coming might--it should force people to think we've got to bring down the cost per capita. I mean, it--but I think those people should be covered, Joe. I--but I...
KERNEN: I--we all do. But...
BUFFETT: I like--I like--I like a plan C better than plan A and plan B.
KERNEN: Well, you know, you're kind of dancing around it.
BUFFETT: And plan...
KERNEN: But you're saying start over and do it on a bar--bipartisan basis is what you just said.
BUFFETT: I would--I would call in the smartest people in the health care field. I mean, you know, people like the fellow out of Kaiser Permanente or Mayos or this fellow the...
KERNEN: Mayo, Cleveland Clinic, Safeway...
BUFFETT: Or Gawande, the doctor--yeah, yeah. Cosgrove at...
KERNEN: Whole Foods.
BUFFETT: ...Cleveland Clinic and...
KERNEN: There's a bunch of smart--there's a bunch of people that have some great private market--or free market ideas. And to do it...
BUFFETT: I'd lock them--I'd lock them in a room, Joe, and I'd tell them, you know, come out when you figure out how--some way to get this going in the other direction toward 13 or 14 percent. And it can be done. It can be done.
QUINTANILLA: Although...
BUFFETT: But it won't be done, you know, if you're trying to write a 2400-page bill that satisfies everybody in the world and all private...
QUINTANILLA: Yeah.
BUFFETT: ...all these private groups.
QUINTANILLA: Warren, to what degree...
QUICK: Carl.
QUINTANILLA: ...to what degree is lowering cost based on bringing more--bringing the uninsured into coverage? Isn't part of expanding coverage part of the mission of lowering costs overall? We're all paying for them anyway.