Disney Earnings and Rising Health Costs 11/13/25

Summary

Squawk Pod – Disney Earnings & Rising Health Costs
November 13, 2025 | CNBC

Episode Overview

In this episode, the Squawk Box team (@Joe Kernen, @Becky Quick, @Andrew Ross Sorkin) unwinds a news-packed morning: the historic end to the longest-ever U.S. government shutdown; a deep-dive with Disney CFO Hugh Johnston on Disney’s quarterly earnings, the strength of the American consumer, and the company's approach to streaming, parks, and AI; and a candid discussion with Oscar Health CEO Mark Bertolini about skyrocketing healthcare costs, expiring ACA subsidies, and bigger reforms potentially needed for the U.S. system.

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Main Themes and Focus

• Government Shutdown Ends: After 43 days, the federal government reopens in record-breaking fashion, but unresolved issues and delayed data releases raise questions about what’s next.
• Disney Earnings: CFO Hugh Johnston breaks down wins and challenges in Disney’s latest quarter, with extra scrutiny on streaming, parks, and the YouTube TV blackout.
• The Health Insurance Debate: Mark Bertolini, Oscar Health CEO and former Aetna Chair, offers rarely-heard insights and bold ideas around the future of the ACA and consumer-centered health system reform.

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Key Discussions & Insights

1. Government Shutdown Fallout

[01:05] - [06:49], [17:07]-[18:35]

• Shutdown Ended After 43 Days

  • Emily Wilkins: Outlines how the government shutdown ended, with most House Republicans and a handful of Democrats voting to reopen (05:12–05:31).
  • Immediate impacts: Furloughed workers returning, with back pay possible within days.
  • “For some workers… paid maybe by Friday, some might not be paid until early next week.” — Emily Wilkins (04:15)

• Lingering Effects

  • Air traffic controller shortages led to flight caps; normalization projected by Thanksgiving (07:02–07:57).
  • “It’s not like you flip a switch and everything goes back to normal.” — Andrew Ross Sorkin (07:57)
  • Delays in government statistical data (e.g., CPI figures) likely for October due to data collection interruptions (02:50–03:25).
  • House leaves town again after the vote. “They weren’t in session for more than 50 days.” — Andrew Ross Sorkin (01:18, 05:54, 06:01)

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2. Disney Earnings & Strategy: Interview with CFO Hugh Johnston (18:35–30:45)

Key Financial Results

• Earnings
  • Q4 EPS: $1.11/share (6c above estimates)
  • Revenue: $22.5B (slightly below forecasts)
  • “For the year we delivered 19% EPS growth, which… in the media and entertainment space… is very, very good.” — Hugh Johnston (19:13)
  • Commitment: Double-digit EPS growth guidance for next year, 50% dividend increase, share repurchases doubled to $7B (20:22).

Deep Dive: Disney’s Businesses

• Streaming (DTC/ESPN)

  • 12.5M subscriber additions, 40% growth in operating income (19:54)
  • “80% of those new retail subs on ESPN are actually bundled subs, which… should contribute to engagement, should contribute to retention...” — Hugh Johnston (21:08)
  • The Charter deal and the strategic importance of international growth.

• Parks and Experiences

  • Bookings for Q1 up 3%, per capita spending at Walt Disney World up 5%, cruise capacity selling out quickly (22:10–22:49).
  • “When it comes to something as significant as a Disney experience, you don’t want to cheap out on that… you want to go all in.” — Hugh Johnston (22:10)

• Ecosystem Advantage

  • “What I refer to as an earnings compounder… I think eventually investors are going to get conviction around that as well.” — Hugh Johnston (19:09)
  • “This whole idea of splitting up assets… that’s what you do when you don’t have a great business…” — Hugh Johnston (24:31)

Current Challenges

• Stock Undervaluation

  • Despite operational momentum, Disney’s stock lags competitors: “I believe it’s underpriced. I really do.” — Hugh Johnston (24:10)

• Digital Blackouts & The YouTube TV Fight

  • Ongoing disputes led to Disney content being blacked out for YouTube TV users.
  • “We’re in the middle of negotiations right now… we’re ready to go as long as they want to.” — Hugh Johnston (25:36)
  • Discussion on platform leverage and legacy TV’s changing power relative to digital platforms.

• Technology & AI

  • Disney is rapidly deploying AI for DTC recommendations, parks guest management, and production tools.
  • “Walt Disney… was a technologist... we’ve continued that… it’s going to drive the profit… over time.” — Hugh Johnston (28:01)

• Industry Consolidation

  • Disney sees itself as positioned differently due to previous strategic acquisitions (Pixar, Lucasfilm, Fox).
  • “We don’t really need to participate in these things the way some [competitors] perhaps [do].” — Hugh Johnston (29:07)

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3. Health Costs & ACA Reform: Mark Bertolini, CEO of Oscar Health (32:28–48:54)

ACA’s Present & Future

• “50% of American small businesses use the Affordable Care Act. Small businesses are 50% of our GDP… 27% of farmers use the Affordable Care Act.” — Mark Bertolini (33:28)
• “75% of the people in the ACA today are from red states. 100 million Americans don’t have access to employer sponsored health insurance.” — Mark Bertolini (33:50)
• Enhanced ACA subsidies are sunsetting, with premiums projected to rise sharply — e.g., for many farmers, monthly premiums could rise from $75 to $300 (33:40).

Market-Based Reform Proposals

• Bertolini challenges the prevailing narrative, pushing for qualified accounts—individualized savings accounts (akin to HSAs) funded by employers, government, and individuals (35:57–37:32).
  • “Every time consumers get control of what they purchase, they have an effect on the underlying costs…” — Mark Bertolini (36:51)
  • “All we have to do is evolve [the ACA]. I don’t care what you call it.” — Mark Bertolini (39:24)
• Joe Kernen: “Obamacare is a sacred cow. You’re never getting rid of it at this point.” (39:19)
  • Bertolini: “Nobody’s actually put a real plan on the table.” (39:37)

Roadblocks and Realities

• Margins and Systemic Inefficiencies: Where does the “give” come from in lowering costs through competition? Bertolini argues a big chunk is inefficiency, not just profit: “It’s actually inefficiency, gross inefficiency in the system…” (40:59)
• Universal Health Care Debate: Bertolini’s approach—consumer choice, pooled risk, regulated minimum coverage—could bridge partisan divides:
  • “Wouldn’t it be great if we came to a single… payer market, either through consumers aggregating their accounts… or the government doing it? …this issue is not an issue between Democrats and Republicans anymore.” — Mark Bertolini (45:40)

Political Realities

• Major stakeholders would need to give up something, and “everybody’s going to have an axe to grind. Everybody’s going to hurt.” (45:59)
• Joe Kernen notes the resistance from entrenched interests and political camps aiming for single-payer, not “free market” single payer. (45:25–45:37)

Notable Policy Quotes

• “We haven’t tried this yet. We’ve tried everything else.” — Mark Bertolini (43:39)
• “We believe we can save up to 26% on the total cost of an employer group if we do it this way.” (44:20)

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Notable Quotes & Memorable Moments

• On Streaming’s Power: “80% of those new retail subs on ESPN are actually bundled subs…” — Hugh Johnston (21:08)
• On the ACA’s Real Users: “75% of the people in the ACA today are from red states.” — Mark Bertolini (33:50)
• On Healthcare System Waste: “It’s actually inefficiency, gross inefficiency in the system.” — Mark Bertolini (40:59)
• On Stock Market Records: “Yeah, the Dow closing at a record level once again. Yesterday, it closed above 48,000 for the first time ever.” — Becky Quick (02:50)
• On Business Synergy: “This whole idea of splitting up assets… that’s what you do when you don’t have a great business…” — Hugh Johnston (24:31)

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Timestamps for Key Segments

• [01:05–06:49, 17:07–18:35]: Shutdown ends, effects on data and air travel, Capitol Hill developments
• [18:35–30:45]: Disney CFO Hugh Johnston Full Interview (results, streaming, parks, YouTube TV, AI, industry consolidation)
• [32:28–48:54]: Mark Bertolini, Oscar Health: Health cost trends, ACA, subsidies, healthcare reform, political and practical challenges

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Tone & Style

The episode is lively, fast-paced, and loaded with slightly skeptical, bantering energy—especially when challenging conventional wisdom on health and media. The interviews are candid and substantive, with both Johnston and Bertolini addressing tough questions directly and in plain language.

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For Listeners Who Missed It

This Squawk Pod episode captures a consequential economic moment (the end of the historic government shutdown), gives investors and business-watchers a deep, actionable read on Disney’s financials and strategy, and presents a provocative, practical discussion on the future of American healthcare—one that isn’t often heard on cable news or even in major business media.

Whether you tune in for markets, media, or policy, this episode is full of details, debate, and takeaways you’ll want to know.

Transcript

[Becky Quick]

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[Joe Kernen]

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[Joe Kernen]

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[Becky Quick]

Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. It's over. The longest government shutdown wrapped. The house extends federal funding through January and that's it.

[Andrew Ross Sorkin]

They left town again after they voted they weren't in session for more than 50 days.

[Becky Quick]

Just how happy and healthy are American consumers? Entertainment and vacation giant Disney reported quarterly numbers. CFO Hugh Johnston joins us.

[Hugh Johnston]

Our consumer is operating in a very.

[Becky Quick]

Healthy way on streaming, spending and leisure.

[Hugh Johnston]

I think they're being more choiceful. But when it comes to something as significant as a Disney experience, you don't want to cheap out on that. When you're taking the family, you want to go all in.

[Becky Quick]

And Obamacare, 15 years after its passing into law, it remains a political football. We have a wide ranging conversation with Oscar Health's Mark Bertolini.

[Mark Bertolini]

50% of American small businesses use the Affordable Care Act. Small businesses are 50% of our GDP. They're the engine of our economy. 27% of farmers use the Affordable Care Act.

[Becky Quick]

Before he ran the exchange based health care company he was CEO of Aetna. Bertolini weighs in on these sticky cost questions when it comes to health insurance.

[Mark Bertolini]

75% of the people in the ACA today are from red states. 100 million Americans don't have access to employer sponsored health insurance.

[Becky Quick]

Plus, when will flights fly normally again and where might we go when they do?

[Joe Kernen]

Florida's got the weather. No taxes.

[Julia Boorstin]

No they don't.

[Joe Kernen]

But yes, they got the weather.

[Andrew Ross Sorkin]

Until hurricane season.

[Becky Quick]

It is Thursday, November 13, 2025. Squawk Pod begins right now.

[Julia Boorstin]

Stand Becky by in three, two, one.

[Andrew Ross Sorkin]

Good morning, everybody. Welcome to Squawk Box right here on cnbc. We're live from the NASDAQ marketsite in Times Square. I'm Becky Quick along with Joe Kernan and Andrew Ross Sorkin. And yeah, the Dow closing at a record level once again. Yesterday, it closed above 48,000 for the first time ever. The government shut down. Even though the government's back open, we're probably not going to be getting the numbers for the latest CPI because the government was closed during those collection weeks, so they never collected the data. It's going to be a while, not just for the airlines, for the government data. Lots of other things to kind of get back on track, too.

[Hugh Johnston]

Nays are 222.

[Andrew Ross Sorkin]

The nays are 209.

[Joe Kernen]

The bill is passed. The motion is adopted without objection. The motion to reconsider is laid on the table. And, and it's an honor now to sign his incredible bill and get our country working again.

[Julia Boorstin]

Thank you. The president signing that bill to fund the government ending what is now the longest shutdown in US History. Emily Wilkins joins us in Washington with the latest. Good morning.

[Emily Wilkins]

Hey, Andrew. Well, yeah, after 43 days, the government shutdown is now over, longest in history. So that vote last night, you saw all but two House Republicans voting to reopen the government. You saw six Democrats that cross the aisle to join them. And then, of course, as you're seeing there, Donald Trump signing that bill last night. And the government's already telling furloughed employees to come back to work today. All of them will be getting the paychecks that they have missed in back pay over the next few days. Now, some of this will depend on how quickly agencies can process the pay. I've heard for some workers who are going to be paid maybe by Friday, some might not be paid until early next week when the funds hit their bank accounts. We're also waiting to see exactly what the plan is for federal data because while things like the September jobs report that was ready to go before the shutdown, but as Becky just mentioned, no one was really collecting the data for the October reports, although, of course, some could be collected retroactively, we're keeping an eye on what BLS plans are there now that they've reopened. And on Capitol Hill, the race is now on for lawmakers to see if they can extend those Affordable Care act premium tax credits before they expire at the end of the year. But many Republicans who have I spoke with yesterday, including Speaker Mike Johnson, want to See wider health care reforms.

[Joe Kernen]

Am I going to guarantee a vote.

[Mark Bertolini]

On aca unreformed Covid era subsidies that is just a boondoggle to insurance companies and robs the taxpayer?

[Joe Kernen]

We got a lot of work to do on that. The Republicans would demand a lot of.

[Hugh Johnston]

Reforms before anything like that was ever possible.

[Joe Kernen]

And we have to go through that deliberative process.

[Emily Wilkins]

After voting last night, lawmakers again left town. They'll be in next week to start catching up on everything they missed in the last 50 some days. And that includes seeing if they can work out those longer term updated fundings for the many parts of the government that are still under that stopgap funding. And we'll see if they're able to do that and avoid another potential shutdown on January 30th. Guys.

[Andrew Ross Sorkin]

Emily, they left town again after they voted. They weren't in session for more than 50 days.

[Emily Wilkins]

Yep. They're coming back on Monday. You know, that is a really great question. I think for a lot of them, they weren't exactly sure when they were coming back. And I think it's just for a lot of them, they necessarily weren't expecting it and weren't planning on it. But I think, Becky, there is really a big question because you saw the Senate in this entire time, you saw them move forward with major defense bills, you saw them make progress on crypto, you saw them move a lot of nominations and some legislation. And I think there's a huge question of like, all right, what are all the things that the House planned to do? And some of the members who were back yesterday, they were like, yeah, there are definitely things that we feel are now in the backlog that we're going to have to rush and push to get done. We interested to see if they make some changes for their schedule for the rest of the year to try to get some of those bills in.

[Joe Kernen]

Okay, I meant to tell you guys, I'm going to be gone for you.

[Julia Boorstin]

Going to be gone for a couple.

[Joe Kernen]

Of days, 50, 50 days.

[Andrew Ross Sorkin]

And then when you come back, you'll.

[Joe Kernen]

Look at that smile, look at that smile.

[Julia Boorstin]

But nobody's smiling about this. What you're about to talk about it.

[Joe Kernen]

Is by air traffic controllers will begin to get paid now that the government shutdown is over. The Department of Transportation and the FAA say flight reductions at dozens of major airports. It's going to be capped at 6%. Not going to go to 10 anymore. It was going to rise to 10% by the end of the week. And a dot release says there has been A rapid decline now in air traffic controller callouts. And Transportation Secretary Sean Duffy said it could take, though, up to a week to start rolling back flight restrictions. They were at 11,000, which was 30% below what was needed to operate what they would consider safely. So they cut back on some of the flights. Hopefully it happens more quickly. It looks like it is not going to 10%, but Thanksgiving calls. It's. Well, not far off.

[Andrew Ross Sorkin]

It's not. I heard one of the major airline CEOs commenting yesterday, saying, I'm sorry, I forget which one it was, but he was saying we should be back on a normal schedule by Thanksgiving. That's how long it's going to take the airlines to kind of catch up because they canceled so many flights. They have people who have to be rebooked and their own internal operations on some of these things. So nothing bounces back quickly. It's not like you flip a switch and everything goes back to normal for a while.

[Joe Kernen]

Stuckey's is looking good, you know what I mean?

[Andrew Ross Sorkin]

Oh, driving.

[Joe Kernen]

A lot of the places. A lot of the places where you stay. Got a pilot? No. Got a free breakfast, too. Open waffle maker.

[Julia Boorstin]

I don't even know what you're talking about. I'm headed to Teterboro after this.

[Joe Kernen]

Yeah, I know.

[Julia Boorstin]

I don't even know what you're.

[Joe Kernen]

You know what that entire area is. You refer to it all the time. Flyover country. You don't even know it, but you don't even know it exists, really, do you?

[Julia Boorstin]

But the book tour, I've been in.

[Joe Kernen]

A lot, and you. And it was like, oh, my God, it's nice here. You said that yesterday.

[Julia Boorstin]

There were a lot of places.

[Joe Kernen]

Oh, my God, you were right. Dead center, Texas.

[Julia Boorstin]

Austin, Texas. Yeah, I love Austin, Texas.

[Joe Kernen]

Yeah, but that's like the middle of the country. It's a little bit different. A little bit of a oasis for. For your kind, I think.

[Julia Boorstin]

Not really, no. It's. It's. It's.

[Joe Kernen]

It's not really.

[Julia Boorstin]

It's very simple. It's very mixed. Mixed, absolutely. The combination of all sorts of people, really. By the way, you just see all. By the way, a lot of coastal people have moved there. That's true. But then there's a lot of Texans there.

[Joe Kernen]

It's really quite Elon was talking about. I mean, people do love it. Great golf course there.

[Julia Boorstin]

It's great. But by the way, it is growing so fast that there's traffic now. There's buildings going up everywhere. I mean, every neighborhood is, like, changing in front of you. Which is probably a great thing and probably a complicated thing for a lot of people.

[Joe Kernen]

Apparently there's a lot of room out there for expansion in that state, I think.

[Andrew Ross Sorkin]

Outside Simmons.

[Julia Boorstin]

Yeah, outside of the state.

[Andrew Ross Sorkin]

Yeah. Outside the statehouse too, by the way. For them, it really is a temporary job. They're only supposed to be there part of the time, but they're probably clocking as many days as our Congress is. Our federal Congresses.

[Joe Kernen]

Yeah, we got to go long. Texas. I don't know how you can do that. There's no ETF for that, but there probably is.

[Julia Boorstin]

You could probably bet something on polymarket.

[Joe Kernen]

Might be an ETF on Texas Related Businesses and Investments. Texas and Florida. Florida's got the weather.

[Julia Boorstin]

No taxes until they don't.

[Andrew Ross Sorkin]

But yes, they got the weather until hurricane season.

[Joe Kernen]

Right. Although they just went through hurricane season.

[Andrew Ross Sorkin]

They got really cold too.

[Joe Kernen]

Did you blink?

[Andrew Ross Sorkin]

It was in the 30s down in Florida. They're not used to.

[Joe Kernen]

Did anything make landfall? I don't think anything. We had Melissa that wasn't great.

[Andrew Ross Sorkin]

Now there were people in Florida who were saying, send us pants.

[Julia Boorstin]

Sports betting player FanDuel partnering with derivatives marketplace CME Group in a predictions market platform that's now set to be released next month. It's going to allow users to bet on financial metrics and sports outcomes even in places where sports gambling is illegal. Now, prediction markets are federally regulated and considered trading platforms, not gambling platforms. The CEO of FanDuel's parent company telling Jim Cramer that the sports prediction product won't be available in areas where users can access FanDuel sports betting state of Nevada disagrees, considers sports prediction markets a form of gambling. That state's Gaming Control Board now announced that FanDuel has surrendered its license to operate in Nevada as a result of all this and said DraftKings has also agreed to withdraw all pending applications for sports wagering in the state. Neither company offered their online sportsbook in that state, but FanDuel had a license as an information services provider. It's very complicated. A lot of different component parts here. And DraftKings has a license application as described as, quote, inactive at the moment. Now in a statement, the regulator there calling the foray into sports events contracts unlawful and said this conduct is incompatible with their ability to participate in Nevada's gaming industry. So you have sort of two forms of gambling. You have the. What used to be the traditional form of gambling which was state regulated like Nevada. Now you have this prediction market situation. Some of these guys want this all to come together, which is what I Always thought, by the way, would be the ultimate outcome. Given that there's something.

[Andrew Ross Sorkin]

Basically what they've just said is like, forget it. We'd rather be able to operate in the predictions market than be able to operate in the state of Nevada.

[Julia Boorstin]

Exactly. And so this is going to be very complicated very quickly. But it also means I would think that maybe polymarket, maybe Kalshee, maybe any of these guys either all get merged up. Either, either, either they all, either Polymark and Kalsi ultimately get into the sports business, gambling business, or, or the sports gambling guys get into the prediction market business. And it's all one thing. I just can't see how there's like a separation.

[Andrew Ross Sorkin]

Well, it's interesting to watch this trickle down in Nevada. The traditional casinos are feeling threatened by this, by the sports books, by the FanDuel, like they're feeling threatened now by the predictions market. So it's, you know, iterations and steps and kind of pick your regulator too.

[Joe Kernen]

I thought there was zero. Well, I didn't think there was zero, but I thought illegal gambling, no one needs it anyway. You need a bookie.

[Andrew Ross Sorkin]

Right.

[Joe Kernen]

Until the recent stories that there's the same four families are still involved in all the.

[Andrew Ross Sorkin]

That's like rigging it, right?

[Joe Kernen]

I know, but what, Right, but what is the. How much is left?

[Andrew Ross Sorkin]

The bets that you can't make somewhere else.

[Joe Kernen]

Bets that you are bookies still in business around the country. I never had one. I never had one. Some of my friends had. Some of my friends did have.

[Julia Boorstin]

My grandfather used to have a bookie.

[Joe Kernen]

Yeah.

[Julia Boorstin]

And we would go and the guy would, would literally sit at the bar at lunchtime. I won't say where. Why he's no longer alive. I mean, my grandfather isn't.

[Joe Kernen]

Why won't you say which bar?

[Julia Boorstin]

Well, because who knows? Maybe, maybe, maybe they're all still in business. Oh yeah, the place is still open anyway. And then you'd go tell us off camera and you know, there'd be an envelope that would get exchanged one way or the other, depending on what was going on that week. And my grandfather would bet on the. Usually the football games on the weekends. There must be Monday or Tuesday. There was a. You know, I'm sure there's, I'm sure.

[Joe Kernen]

There'S a number by some Wall street firm that follows the gaming industry that knows exactly what the percentage of illegal gambling is left. What do you, what would you guess? 50% is left, 10%, 80%. What is left from that business?

[Julia Boorstin]

I don't know.

[Andrew Ross Sorkin]

It's gotta be Tiny. Because you can do everything.

[Joe Kernen]

I would think it would be tiny.

[Andrew Ross Sorkin]

You know what? There's not a lot left of pennies.

[Joe Kernen]

Not a lot of left pennies.

[Andrew Ross Sorkin]

The last one, they've minted the last pennies yesterday.

[Joe Kernen]

It costs three and a half cents to make a penny.

[Andrew Ross Sorkin]

3.7 cents, by the way. It still costs pennies. But all of a sudden seeing this makes me want to go out and hoard pennies.

[Joe Kernen]

So you brought that up because, you know, that's basically what I'm betting on a lot of these things.

[Julia Boorstin]

By the way, a nickel costs more than a nickel to make.

[Mark Bertolini]

Yeah.

[Andrew Ross Sorkin]

Really?

[Joe Kernen]

That might be next. Tens of. Does anyone use. Use cash anyway?

[Andrew Ross Sorkin]

No, that's what I mean. I just go find pictures.

[Joe Kernen]

They gave me some change the other day. I'm like, keep it. You know, you put it in that little thing. It's like, I don't know what.

[Julia Boorstin]

Tease will be next.

[Becky Quick]

Coming up, Disney feeling the heat from the ongoing dispute with YouTube TV, blacking out the company's channels for some consumers.

[Hugh Johnston]

We're in the middle of negotiations right now. Things are live, they're happening. Obviously, as we entered the year, we knew this was going to be a challenging battle and we prepared ourselves for it. And we're ready to go as long as they want to squawk.

[Becky Quick]

Pod will be right back.

[Hugh Johnston]

Hey there, it's Dr. Sanjay Gupta with.

[Andrew Ross Sorkin]

Some exciting news to share.

[Mark Bertolini]

CNN is now streaming. That means you can read, watch and.

[Hugh Johnston]

Stream everything in one subscription.

[Mark Bertolini]

You can watch news live 24 7. You can also explore catch up videos and explainer videos. And you can also watch the library of CNN's originals, including my latest documentary. It doesn't have to hurt, just go to CNN.com AllAccess this episode is brought.

[Julia Boorstin]

To you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Landsford for this information packed daily market Preview delivered in 10.

[Mark Bertolini]

Minutes or less including projected stock updates.

[Julia Boorstin]

Mon policy decisions and key results and statistics that may impact your trading. Download the latest episode and [e-mail] MarketUpdatePodcast or find Schwab Market Update wherever you get your podcasts. The holidays mean more travel, more shopping, more time online and more personal info in more places that could expose you more to identity theft. But Lifelock monitors millions of data points per second. If your identity is stolen, our US based restoration specialists will fix it, guaranteed or your money back. Don't face drained accounts, fraudulent loans or financial losses alone. Get more holiday fun and less Holiday worry with LifeLock Save up to 40% your first year. Visit LifeLock.com Special offer terms apply.

[Becky Quick]

Welcome back.

[Andrew Ross Sorkin]

This is SQUAWK POD up and Andrew Q.

[Julia Boorstin]

You are watching the one and only Squawk Box right here on cnbc. I'm Andrew Osorkin along with Joe Kernan and Becky Quick. We got a whole bunch of big stories to tell you about the longest government shutdown in history. It's finally over, folks. President Trump signing a funding bill, furloughed federal employees headed back to work or at least we hope, and we'll start getting those missed paychecks.

[Joe Kernen]

Let's check on the markets. And we were actually talking, I thought someone wrote the book in 1999, Dow 50,000. It wasn't. We used to talk about it all the time. It was Jim Glassman and some guy named Hassett. It was insane at the time. Dow 36,000.

[Andrew Ross Sorkin]

Not Kevin Hassett.

[Joe Kernen]

No, not Kevin Hassett. In a different Jim go, It was Dow 36,000.

[Andrew Ross Sorkin]

What was the time frame that they put it in?

[Joe Kernen]

I guess it was not 20. I don't think they actually if you're a decent strategist, you never put time and time and price. But that we thought was crazy. And now, and I thought it was 50, someone else wrote a book about 40,000. So here we are. Just to give you some perspective on how far we've come in the S and P is just below 7,000, which was a lot of people's year end targets. Then they switched them after April and went back down to 6,000 on Liberation Day or whatever we called it. And There is the 10 year, which is 4.08. Disney might be down a little. That might be why the Dow. Sorry, Hugh, but that might be why the Dow is a little bit negative.

[Julia Boorstin]

Well, we've got him. Disney reporting fourth quarter results just moments ago. We're going to get to walk through all of this. Here's what happened. Earnings a dollar eleven a share, six cents better than estimates. Revenue coming in at $22.5 billion. Now that was slightly below expectations. And as Joe mentioned, the man is here. Joining us first on cbc, Hugh Johnson, Disney cfo. Also with us, our own Julia Boorstin. Good morning. Good morning. Good morning. Okay, so there's a whole bunch of things going on in this earnings report. There's some, there's some beats, there's some misses, there's buyback plans, dividends. Let's walk through it.

[Hugh Johnston]

Yeah. In some ways, Good morning. It's, I think important to take a.

[Mark Bertolini]

Little bit of A step back and.

[Hugh Johnston]

Say how are we doing over a longer period of time. For the year we delivered 19% EPS growth, which is I think pretty darn good. In the context of the media and entertainment space I think is very, very good. And over the last three years we've actually delivered 19% EPS growth per year for the last three years. So overall the company strategy seems to be working awfully well. Diving a little bit deeper into what I think are some of the most important metrics for, for the analysts. Number one, DTC terrific quarter 12 and a half million sub adds 40% operating income growth hit 1 billion three this year compared to 100 million bucks last year. And then the experiences business grew revenue 6% and grew operating income 13%. So overall we're leaving the year with a lot of momentum both on entertainment and on on the experiences business. And as a result of that we guided to double digit EPS growth for the year. Doubled the share repurchase, 50% increase in the dividend. Overall we feel good about being what I refer to as an earnings compounder and I think eventually investors are going to get conviction around that as well.

[Julia Boorstin]

I know everyone's got questions that the table what was the dividend choice meaning to do this?

[Hugh Johnston]

A number of things. Number one, obviously when you commit to a dividend, that's a commitment forever. So it's awfully hard to cut the dividend unless some dramatic crisis happens. And we wanted to send a signal our cash flow is strong and it's going to be strong for a sustained period of time. Same thing with share repurchase to double the share repurchase to $7 billion. That's a signal that says look, we expect cash flow not to be strong just for this year, but for a number of years going forward.

[Andrew Ross Sorkin]

Give us some insight into what's happening in the streaming division. You added more subscribers than expected, but you also had the charter deal and you also launched the ESPN app. What are you seeing in terms of putting all your ESPN content on streaming due to the value of the bundle?

[Hugh Johnston]

Yeah, it's actually doing very well in the things that we find most important. Number one, reducing churn and number two, increasing engagement. If you look at the sub increase in total, as you mentioned, about half of it and this was expected was the charter deal and those wholesale subs. But the other half was retail and with that retail, over half of that was international, which is strategically quite important for us. And the balance of it was the bundles that we're doing with Disney plus with espn. One of the things I think we're most excited about is fully 80% of those new retail subs on on ESPN are actually bundled subs, which again should contribute to engagement, should contribute to retention and frankly make the service more valuable over time.

[Andrew Ross Sorkin]

And then in terms of the Parks division, can you give a little bit more color to what you're seeing in terms of the health of the consumer?

[Hugh Johnston]

Yeah.

[Andrew Ross Sorkin]

Whether it's bookings, the hotel rooms, the consumer spending. Is the, the consumer resilient? Are they, are they making plans for the holidays and beyond, I think think.

[Hugh Johnston]

They'Re being more choiceful. But when it comes to something as significant as a Disney experience, you don't want to cheap out on that. You want to, when you're taking the family, you want to go all in. So a couple of facts that. Number one, bookings for the first quarter are up 3%. So we feel good that we've got continued momentum there. Number two, per caps. So the amount spending per head at Walt Disney world was up 5% for the quarter. So again, people are spending. And then number three, cruise ships, despite the fact that we've added a lot of capacity in cruise ships, we're selling out at the same rate that we had been previously. So that added capacity is filling up quickly. So overall experiences, our consumer is operating in a very healthy way.

[Joe Kernen]

I made a point yesterday, this should be the best time in the world for media companies, I would say. I mean, Dow is at an all time high. There's just, there's a lot of wind at the back of a lot of business in the United States. And I just, it's just not happening. And I made the point that if anyone looked set up for success in media, I mean, all the assets that you have seem to help each other. You build a brand, you put it in a theme park, you have great content from studios, you put it on streaming. All these things work perfectly. You're at the $200 billion market, Kevin. Netflix is 500 came out of nowhere with only streaming.

[Julia Boorstin]

Yeah.

[Joe Kernen]

What does it look like?

[Hugh Johnston]

Joe, I think you make a great point as I just opened with 19% EPS, CAGR for three years says to me we are an earnings compounder and we're a great cash generator. In addition to that, to your point about the Disney ecosystem, let's use Lilo and Stitch as an example. So it was $1 billion movie for it. Biggest, biggest movie this year. Lilo and Stitch looking phenomenally good. In addition to that, we put it on the streaming service had 14 million views in five days. Right. So super, super kind.

[Joe Kernen]

You make it a great case. But my point was, why is it down from much higher level?

[Hugh Johnston]

Yeah, well, yeah, you have to take.

[Joe Kernen]

Out mispriced the stock.

[Hugh Johnston]

I believe it's underpriced. I really do. I believe investors are going to build conviction in it over time and we actually see some investors doing that right now. But I think we need to continue to prove the case that, you know what, as we go through this transition, we are going to emerge one of the winners. In fact, we're already one of the.

[Joe Kernen]

All those things are additive. They're not a drag on.

[Hugh Johnston]

No, I actually think quite the opposite. I think that that integrated ecosystem works really, really well. This whole idea of splitting up assets and all that, that's when you do what you do when you don't have a great business, when you have Netflix.

[Joe Kernen]

Is showing everyone, making everyone think differently.

[Hugh Johnston]

Well, they've got a great business too, but they're, they're very narrow. But they're deep. On general entertainment, our strategy is different. We run broad in terms of dtc, we have news, we have sports, we have broad scale entertainment, kids entertainment. Who knows? Ultimately on the service you may see gaming and things like that as well. So I think it's basically the portal into all things Disney and with the IP that we have, we're going to monetize it.

[Andrew Ross Sorkin]

Well, okay, yesterday we had Tom Rogers on and he said that this battle that you're in with YouTube right now, the idea that you've stayed off for that long.

[Hugh Johnston]

Right.

[Andrew Ross Sorkin]

And that it hasn't been broken, even though we're in football season and all these other things that you would normally see both sides come together and reach a deal over it. He said that that shows some of the problems with the legacy broadcasting and how the power has really been diluted. Do you think that's the case and where do things stand with YouTube right now?

[Hugh Johnston]

No, I think that's an exaggeration. With all due respect to Tom, I know he founded cnbc, but I do think that's an exaggeration and a bit more than is a reality. We're in the middle of negotiations right now. Things are live, they're happening obviously where as we entered the year, we, we knew this was going to be a challenging battle and we prepared ourselves for it and we're ready to go as long as they want to. So. But I think beyond that, I'd rather. One of the magic.

[Julia Boorstin]

One of the concerns I think is that Google, oddly enough, given how small a piece of their Overall business is YouTube. From a leverage perspective, they don't, they may not care as much as somebody else. And so what does that say? What does that say? I mean, this is. You can have leverage if you care a lot and you can have a lot of leverage if you don't care at all.

[Hugh Johnston]

Yeah, I think at the end of the day, financially, I understand what you're saying, but this is ultimately about your customers. And right now YouTube customers are suffering without this critical content for them. Right. Sports in the middle of football season is about as important as you can get. So I think from that perspective, we perhaps have some leverage as well because there are other places people can go.

[Julia Boorstin]

To get that sports beyond just the fees involved. There's been discussion that there's other elements to this deal that are sort of in play. Can you speak to that?

[Hugh Johnston]

You know, I'm just not going to comment on, on the various elements of the negotiation. It's a negotiation. There's back and forth. They want certain things, we want certain things.

[Julia Boorstin]

How do you feel about this? As one, one related thing, the idea broadly of ingestion. So in the business there's a, there's a question mark. Right now you can use the apps to get a lot of content.

[Mark Bertolini]

Yeah.

[Julia Boorstin]

But a lot of folks like YouTube, if they're going to try, they want to sell the whole package and they would like to ingest, if you will, a lot of the content that's on the direct to consumer apps into their own systems. How, how do you ultimately feel about that longer term?

[Hugh Johnston]

Yeah, anything that we have, we actually would prefer to run through a lot of our own distribution channels. But that's not just Disney owned as well. So I think we're going to just let the negotiation play out and we'll make a call on these things as we negotiate.

[Andrew Ross Sorkin]

You Joe just compared your market cap to Netflix and we heard Netflix talk about how they're using AI to cut costs. Paramount Skydance just reported they talked a lot about how they're focusing on tech to cut costs. How are you thinking about AI right now as a driver of potential profit, profitability?

[Hugh Johnston]

Well, it's a big deal for us across a variety of areas if you think about it right now. Number one is obviously in the DTC service, it just can make you much more capable, similar to what Netflix is doing. We're going down those same paths. Number two is in our experiences, business, both for guest management as well as forecast management, we have the opportunity to leverage AI to become a much better experience for people. Number three is in video production, post production, design tools and all of those things. If you think about it, what Walt Disney did literally 100 years ago was.

[Mark Bertolini]

He was a technologist.

[Hugh Johnston]

The animation he created didn't exist anywhere else. And we've continued that. And then the last piece, of course, is the Office, which is what everyone talks about. How can you make your office workers much more efficient? We've got a ton of active initiatives on all of those and I do think it's going to drive the profit a little bit of profitability of the business over time.

[Andrew Ross Sorkin]

There's also been a lot of talk in the industry about what Paramount Skydance has been doing in terms of its attempts to acquire Warner Brothers Discovery. How does that all, all that consolidation impact Disney?

[Hugh Johnston]

Yeah, it's a great question. I mean, number one, obviously I don't comment on M and A. That said, if you look at what they're talking about doing, it's really what we did 10 years ago. Whether it was the Fox deal or the Pixar deal or the Lucasfilm deal, bringing more IP into the house is something that we did a good long time ago. As a result of that, we don't really need to participate in these things the way some perhaps.

[Julia Boorstin]

Let me ask you a separate related question, which is there's always discussion about what regulators would allow or wouldn't allow in terms of companies that might pursue deals or other deals. There's a view that if David Ellison were to pursue this deal, that the regulars would let that fly through. There's other views that if Brian Roberts, of course, who runs Comcast, were to do a deal, that maybe the President has other views about Brian Roberts or other things that would make a deal tougher. There's questions about if an Amazon were to jump into the fray, for example, and want to buy just the studio business and the streaming business, whether that would be too much consolidation if in fact the regulators were to call you, because they often do in these circumstances, to call the competitors and say, is this good or bad for competition? You would say what?

[Hugh Johnston]

It's going to depend on who the competitor is. It's going to depend on what the circumstances of a deal are. So in general, look, I'm generally in favor of the market deciding things. That said, we'll see what the specific situation is and then I'll answer at that point.

[Julia Boorstin]

Okay. Hugh Johnson, thank you for coming in this morning.

[Hugh Johnston]

Thank you. Great to be with you guys.

[Julia Boorstin]

Thank you. And of course, we should mention you are a member of the CNBC CFO Council.

[Hugh Johnston]

Absolutely. An illustrious and have been for a long time.

[Mark Bertolini]

Yes.

[Julia Boorstin]

Thank you.

[Becky Quick]

Next on Squawk Pod, key tax subsidies connected to Obamacare will expire at year's end despite the 43 day government shutdown where they were a sticking point. Health care executive Mark Bertolini, CEO of Oscar Health, which manages plans on the affordable Care exchanges, weighs in on the power of the market.

[Joe Kernen]

Obamacare is a sacred cow. You're never getting rid of it. At this point.

[Mark Bertolini]

All we have to do is evolve it. I don't care what you call it.

[Becky Quick]

And what Americans could do to afford better health.

[Mark Bertolini]

Nobody's actually put a real plan on the table.

[Joe Kernen]

Hey there.

[Mark Bertolini]

It's Dr. Sanjay Gupta with some exciting news to share. CNN is now streaming. That means you can read, watch and stream everything in one subscription. You can watch news live 24. 7. You can also explore catch up videos and explainer videos. And you can also watch the library of CNN's originals, including my latest documentary, it doesn't have to hurt, just go.

[Julia Boorstin]

To CNN.com allaccess the heaviest metal credit card of all time, rumored to be one of only 18 in existence, plated with the very same tungsten that forged the international space station and wielded at business dinners like a samurai sword. It's a classic corporate power move. But the real power move, having end to end visibility on your most critical shipments, FedEx, the new power move.

[Becky Quick]

You're listening to Squawk Pod from cnbc. Here's Becky Quick.

[Andrew Ross Sorkin]

Welcome back, everybody. Workers across the nation are in the thick of changing, renewing or signing up for certain health care plans. Under the current open enrollment period, millions of people could and actually very likely will see their insurance premiums rise pretty sharply next year. Joining us right now with insights on the current state of the health insurance industry is Mark Bertolini. He is the CEO of Oscar Health. He's also the new chairman of Verizon and the former chairman and CEO of Aetna, a longtime friend of the show. Mark, thank you for joining us.

[Mark Bertolini]

Good to be here, Becky, thanks.

[Andrew Ross Sorkin]

We spoke earlier this year when you came in about the problems in the health care industry. Nothing changed. Nothing happened. But here we are and we're probably at a moment where it's going to be getting a lot more attention because of what just happened with the government shutdown.

[Mark Bertolini]

Yes.

[Andrew Ross Sorkin]

There's a lot of confusion out there about premiums going up and how much of that is related to the subsidies ending. How much of that is related to a broken health care system that sees inflation far outpace inflation in other arenas.

[Mark Bertolini]

So what's happening currently in the Affordable Care act and the enhanced subsidies is that there's a lot of rhetoric about who's getting access to these funds, like $1.5 trillion being spent on illegal immigrants. Not true. 50% of American small businesses use the Affordable Care Act. Small businesses are 50% of our GDP. They're the engine of our economy. 27% of farmers use the Affordable Care act. And the average farmer makes $60,000 a year gross. Their current premium is $75. With enhanced subsidies, it's going to go up to $300. So $225 a month more out of 60,000 grows is going to pretty much make it difficult for them to do other things like put food on the table, buy seed, do all those other sorts of things that operate their farms. So we're talking about the very basis of our economy and the people that make our economy work. 75% of the people in the ACA today are from red states. 100 million Americans don't have access to employer sponsored health insurance in this country. And so with all of those characteristics coming together and the high cost of health care, drug development, you know, skyrocketing health care costs in your facilities everywhere else. We have a system built 80 years ago that has built into it. Inflation, everybody gets. They're not price sensitive to their benefits for the most part. And we build hospitals in every nation in the country or every state, city, and state in the country so that we created a demand pull into the system that has driven cost up inexorably. Now, what the Affordable Care act has done that most people don't understand is it's reduced uninsured from 15% to 8%. That has saved $10 billion a year in uncompensated care and charity costs that used to go to hospitals, 10 billion a year. That will reverse to an $80 billion problem over the next 10 years if we start moving that uninsured rate back up.

[Andrew Ross Sorkin]

The answer isn't simply subsidies, though.

[Mark Bertolini]

No.

[Andrew Ross Sorkin]

There are so many broken things in the system and so many reasons that health care costs go up annually with or without the subsidies.

[Mark Bertolini]

Exactly.

[Andrew Ross Sorkin]

So how do you get at that? And what kind of problem can we, what kind of problem solving can we actually do in the next, oh, I don't know, two months?

[Mark Bertolini]

So we should create a qualified account. And there has been some concern about fraud, waste and abuse in the system, and there has been some, not as much as people would put on the table. 2.4 million was the number last year. People that are cheating the system. It was really 450,000 at Oscars, 27,000 people out of 2.1 million people that we cover. So it was 1.3% when we got down to the actual understanding of each of those people. But let's create a qualified account that is the basis, the doorway to employers, government or individuals putting money into a qualified account that allows them to spend health care their way. So if a consumer is in charge of buying the product, you're going to have an impact on price. Every time consumers get control of what they purchase, they have an effect on the underlying costs and the price of, of the services they buy.

[Andrew Ross Sorkin]

When you say an HSA account like that, an account where money goes in, I think of a defined benefit going to defined payouts on what you can see with some of these things, much like we did when we got rid of pensions in favor of 401ks. It puts a lot more of the freedom in the hands of the individual buyer, but it also puts a lot more of the potential burden if you mess it up that there's no safety net there to catch you.

[Mark Bertolini]

Currently, 95% of people that buy in the individual market today use a broker who have the tools to help them understand which plans they should pick. So I think the first order of business is do we have the technology and the support to be able to help people pick the right plan, have money left over after they pick their plan and turn around and be able to pay their out of pocket costs.

[Joe Kernen]

Less Replacing Obamacare, in addition to Obamacare.

[Mark Bertolini]

I would redo the whole thing. I would use the individual market as a single risk pool. I would use the risk adjustment that's used to allay all the critical costs or catastrophic costs that go through the system, get spread over many more people than it can happen to anyone on board.

[Joe Kernen]

This is the Republican holy grail, what they want to try to do. It sounded like you started with making an impassioned plea for Obamacare, but you'd really like to do what Republicans would like to replace it with.

[Mark Bertolini]

But we, we would like to allow people to get subsidies where they need it. The farmer, the small business owner.

[Joe Kernen]

For couldn't they get subsidies and then buy the HSAs?

[Mark Bertolini]

Yes.

[Julia Boorstin]

Well, no.

[Mark Bertolini]

You put the subsidies into the HSAs, right. You put the employer money from your.

[Joe Kernen]

Employer into the hsa.

[Julia Boorstin]

Right?

[Mark Bertolini]

Right. And you could put your own money.

[Joe Kernen]

Into the HSA and then you then when, when you own it, you're not going to be well, you don't care about what anything costs. You're going to watch very closely.

[Mark Bertolini]

Whatever think that's exactly right. And, and for 40% of Americans last year, two out of five Americans borrowed $74.9 billion from banks to pay their out of pocket costs for health care. It's a giant suck on the economy. And so if we allow people to buy the network they want, because in the individual market we have narrow networks, I can find my network instead of my employer deciding what it is, I can buy my benefits. If I'm going to have a family, I want better obstetrics, I'm going to have surgery. I buy my benefits using the funds that are in my account, leaving me money to either pay my out of pocket costs, depending on the plan design I pick, or to buy other products like dental vision.

[Joe Kernen]

But Mark. But Obamacare is a sacred cow. You're never getting rid of it at this point.

[Mark Bertolini]

All we have to do is evolve it. I don't care what you call it. Just use the concept of the network of the, of the risk pool.

[Joe Kernen]

But this is what Republicans have been saying and people just roll their eyes that that's what they want to do.

[Mark Bertolini]

Well, nobody's actually put a real plan.

[Joe Kernen]

On the table, but they say hsa, find your own help. Get, you know, get the middlemen out, get the insurance companies out.

[Mark Bertolini]

Well, no, the insurance companies have to be there.

[Joe Kernen]

They have to be there.

[Andrew Ross Sorkin]

But they, by the way, you guys are working with people on both sides of the aisle. We are to try and bring this about. And I have to say there are times when I think it is just an expansion of Obamacare. There are times when I think it is an evolution to the HSA program that, that the Republicans are pushing. But what you're really looking for is every American to be covered and that's almost universal health care. But with the choice in the hands.

[Julia Boorstin]

Of the consumer, which I'm trying to figure out where the margin is going to get taken from, somebody has to lose in all of this.

[Mark Bertolini]

So what will happen, just like in automobile sales and in books and other things people buy online, is that they're going to compress the margins by buying what is valuable to them. They're going to make that value equation.

[Julia Boorstin]

Right, I understand that, but you're effectively arguing this more competition should compete away margin. But I'm trying to understand where the margin gets competed away most. Meaning is it ultimately that actually it's going to come out of the hide of the doctors, it's going to come out of the hide the hospital systems going to come out of the hide of the insurance companies. It could, it can't just be that, that, that more money comes into the system and the same amount of profits.

[Andrew Ross Sorkin]

Unless consumers are paying more.

[Hugh Johnston]

But.

[Mark Bertolini]

Right, but it's not all margin. It's actually inefficiency, gross inefficiency in the system. If you look at the hospital systems across the company, most of your losing.

[Julia Boorstin]

Money could be somebody's profit in some way.

[Mark Bertolini]

It could be. Right. But you have.

[Julia Boorstin]

I'm not, I'm not, I'm not discounting what you're suggesting. I'm just to try to understand.

[Mark Bertolini]

Tried.

[Julia Boorstin]

We looked at a pie chart of where all the money.

[Mark Bertolini]

We've tried everything else to solve this problem other than put the consumer in charge of what they buy.

[Andrew Ross Sorkin]

Let me ask you one more question that always kind of worries me. I understand the concept of putting it into millions and millions of people so you offset the risk. But if every consumer who is healthy and young opts for the minimum, very bare minimum plan, as I would have done in my 20s, doesn't that just mean that the bigger pool is a pool full of far more expensive people who are therefore going to have to pay much higher premiums if you're not older?

[Joe Kernen]

Yeah.

[Andrew Ross Sorkin]

But if you're not upsetting the older people who need more help or the families with young really healthy people, how.

[Mark Bertolini]

What happens in the market today is it's one big risk pool that gets settled at the end of the year across all the plans. So if a plan has more risk in it, sicker people, they get paid by the plans who don't have any. And so if you even out that risk every year, you socialize the risk across the whole population, you now don't have a problem of underwriting, which is what you're talking about. Sicker people cost more money today. In a small group, a pregnancy causes a double digit rate increase the next year.

[Andrew Ross Sorkin]

One employee for one employee in a population. Employee population. Population of how big?

[Mark Bertolini]

50.

[Andrew Ross Sorkin]

So everybody.

[Mark Bertolini]

So because you're underwriting that population and it's getting priced. In Michigan, double digit rate increases for the last five years. In Arizona, 28 to 30% rate increases. In small businesses today because they're underwriting that pool.

[Andrew Ross Sorkin]

And that has nothing to do with the ACA subsidies, the additional subsidies.

[Mark Bertolini]

And so what happens with small employers is they stop offering coverage and they're sending them into the ACA saying go buy your own product.

[Joe Kernen]

That's not good. But the margins you're talking About Andrew, Every single entity that's going to see that happen is going to resist what you're trying to do.

[Mark Bertolini]

Of course.

[Julia Boorstin]

Well, that's why I'm trying to understand how this is all going to happen.

[Joe Kernen]

It's not going to happen.

[Mark Bertolini]

You have to give it to the consumers first. You have to create it. And that creates the, the, that creates the movement.

[Joe Kernen]

But there's a lot of hands in there.

[Julia Boorstin]

There's a lot of hands in there that are getting lots of pieces.

[Andrew Ross Sorkin]

I mean, that's why it's been such an intractable problem for so long.

[Mark Bertolini]

Right. But we haven't tried this yet. We've tried everything else.

[Andrew Ross Sorkin]

What's the feedback you get from members of Congress when you lobby on either side of the aisle on this?

[Mark Bertolini]

The way I've been talking about it is when Obamacare got started, people thought we're going to ultimately have an individual market for all Americans run by the government. That was sort of the aim. Right. You can keep your plan. Right. In this model I'm talking about, you keep your network, you keep your plan. Your funding just changes. You separate the funding from the financing, from the investment decision.

[Andrew Ross Sorkin]

I mean, employers will love hearing this. Yeah, the defining distribution they would love hearing. But again, anything the employer is super excited about makes me think as an employee.

[Mark Bertolini]

Well, we believe we can save up to 26% on the total cost of an employer group if we do it this way. So if you think about that as the model, ultimately the consumers are going to push it. They're going to push it through. So the risk, managing the risk across the whole population is really important, number one. Number two, having innovation in product. And what happens with employers is they offer two or three products in one network. I don't get that choice. In the Affordable Care act, we've limited the number of products we offer because the CMS was concerned about confusing people and buying their product. People are smarter than we think and they go to sources to get them. So this is the way to start the process.

[Andrew Ross Sorkin]

It's an intriguing argument. It's an intriguing potential possibility. I've loved talking to you about this over the years and I hope we get to do a lot more.

[Joe Kernen]

Mark isn't. There's an entire political class that viewed the Affordable Care act as baby steps to single payer.

[Hugh Johnston]

Right.

[Joe Kernen]

They're not going to let you do this.

[Mark Bertolini]

This would be single. This would be single pair.

[Joe Kernen]

It is in a different way. It's a free market single. It's not a government single payer. It's A free market, single payer.

[Mark Bertolini]

Right.

[Joe Kernen]

That would work. Well, that's the opposite of what they want.

[Mark Bertolini]

Wouldn't it be great if we came to a single corporate, quote unquote, single payer market, either through consumers aggregating their accounts to a qualified account or the government doing it? And all of a sudden this issue is not an issue between Democrats and Republicans anymore.

[Andrew Ross Sorkin]

It's kind of brilliant.

[Mark Bertolini]

I mean, wouldn't that be the, Wouldn't.

[Andrew Ross Sorkin]

That be the best solution to everybody? But at the same time, it probably ticks them all off in some way.

[Mark Bertolini]

Too, which everybody, everybody's going to have an axe to grind. Everybody's going to hurt. But that's the only way we solve this problem. If we expect everybody to keep going as they're going and have this workout.

[Joe Kernen]

Wall someone's writing in, Mark wants even more government involvement in health care. Would it, Is that how it would end up, in your view? It would be less, wouldn't it? The government's still got to fund a.

[Mark Bertolini]

Lot of it, the government. So.

[Joe Kernen]

But if you can keep prices, keep prices down, it wouldn't be as much of a.

[Mark Bertolini]

So in the Affordable Care Act, $7500 a year for coverage.

[Joe Kernen]

Yeah.

[Mark Bertolini]

In Medicaid, $8,500 a year in coverage. And I'm rounding it to the nearest hundred dollars in employer sponsored insurance, $9,400 in Medicaid, Medicare, $14,700.

[Joe Kernen]

Right. They don't do it very well, do they?

[Mark Bertolini]

No. And so if you put all of that into a single pool where people can buy what they need, we're going to have to have a limit on the bottom where people have to have a qualified health plan. Right. Something that is sufficient or catastrophic.

[Hugh Johnston]

Yeah.

[Mark Bertolini]

We can't have them just doing, you know, these minimum benefit plans that, you know, blow up after you hit a certain number.

[Julia Boorstin]

Right.

[Mark Bertolini]

So we have to have a qualified benefit, but we define that at the state level. We can create these pools at the state level, state based exchanges where people can buy, then the government, then we can give people the freedom to buy what they want. And by the way, you know, this is a red state kind of issue to a big red state kind of.

[Andrew Ross Sorkin]

Because they have so many people in the program. Okay, we have to run. But before we let you go, you are the newly named independent chairman at Verizon for the newly named CEO Dan Schulman.

[Mark Bertolini]

Yes.

[Andrew Ross Sorkin]

Why the change and what's going to be different at this point?

[Mark Bertolini]

Verizon has gone from number one in market cap bond ratings and shares to number three. And the network isn't as differentiated as it used to be, in large part because everybody's been spending money to put these 5G networks in place. So losing 30% share over the last eight years is an issue. And we have to do something different.

[Julia Boorstin]

What does that mean?

[Mark Bertolini]

We have to evaluate underlying cost structure, all those sorts of things. And Dan's working on this. So I'm not going to get in front of Dan's story, but Dan is working on this every day. And we believe that once we have that plan in place, we'll have a good story. The street reacted early on that there's going to be a price war. I think it's less about price war and the price war and the value of what we're offering to people through the product. But Dan's coming up with that plan, so I don't want to step on his parade. And he'll be coming forward with its own sooner rather than later. And I think the board needed to act and we acted.

[Andrew Ross Sorkin]

Mark Bertolini, thank you very much for joining us today.

[Joe Kernen]

Thank you.

[Mark Bertolini]

Great to be here.

[Julia Boorstin]

Thank you.

[Andrew Ross Sorkin]

You too.

[Becky Quick]

And that is the POD for today. Thanks for listening whenever and wherever you do. Squawkbox is hosted by Joe Kernan, Becky Quick and Andrew Ross Sorkin. Tune in weekday mornings on CNBC at 6 Eastern to get the smartest and takes and analysis from our TV show right into your ears. Follow Squawkpod wherever you get your podcasts. We'll meet you right back here tomorrow.

[Julia Boorstin]

We are clear. Thanks, guys. CNBC Sport on the Record, your front.

[Mark Bertolini]

Row seat to sports and business. From commissioners and owners to media executives and top athletes. These are Rembrandt, I'm telling you, these.

[Hugh Johnston]

Franchises on the Record, all new Saturdays, three Eastern.