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The former Senate Democratic leader will serve as both the secretary of the Department of Health and Human Services and the head of the new White House Office of Health Reform. Lambrew will serve as deputy director.

The president-elect linked the nation's economic problems directly to what he calls the failure of the health care system. He said the nation cannot afford to turn its back on health care reform, as the current system, he says, is failing too many families.

Obama began the press conference by discussing two issues dominating the news: the scandal surrounding Illinois Governor Rod Blagojevich, who was arrested Wednesday, and the auto industry bailout.

Blagojevich is at the center of widespread corruption scandal involving the charge that he was looking to sell the Senate seat vacated by Obama to the highest bidder. Obama said "he was as appalled and disappointed as anybody" about these revelations, and that he is in no way involved in the scandal and never spoke to the governor about the Senate seat.

"I am confident that no representatives of mine would have any part in any deals related to this seat," said Obama.

He also called for Blagojevich's resignation.

Obama also discussed the struggling auto industry, which he said, at this moment of great challenge for economy, cannot collapse. He reiterated his call for short-term assistance while holding the auto companies accountable and protecting taxpayers. He said he's hopeful a final agreement can be reached this week.