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Is Military Conflict With North Korea Inevitable?; U.S. Embassy Employees In Cuba Possibly Subject To 'Acoustic Attack'; Interview with Sen. Ron Johnson the Health Care Battle. Aired 7:30-8a ET

Aired August 10, 2017 - 07:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

(COMMERCIAL BREAK)

[07:32:00] ALISYN CAMEROTA, CNN ANCHOR: The tension with North Korea seems to be escalating by the day. North Korea announced that it has a specific plan to fire several ballistic missiles into the waters near Guam.

How should the U.S. respond?

Let's discuss with former NATO Supreme Allied Commander General Wesley Clark, and retired U.S. Army Brigadier General Anthony Tata. General Tata is the author of the book, "Besieged."

Gentlemen, thank you very much for being here. We need your expertise this morning.

So, North Korea has gone beyond rhetoric in that they have produced actual papers of an outline -- a plan to fire these several intermediate ballistic missiles into the waters near Guam.

General Clark, how should the U.S. respond?

GEN. WESLEY CLARK (RET.), FORMER NATO SUPREME ALLIED COMMANDER: Well, I think we need to have direct, private talks with North Korea. I think the United States Secretary of State or a distinguished emissary should go over there and talk directly to the North Korean leader.

It's possible that North Korea could send out a notice to airmen and mariners -- a so-called notam -- and this could be done safely.

But how do we know what the next step is? And this is just ratcheting up this escalation that makes this extremely dangerous and we have to step back from this immediate challenge right now and ask ourselves what's the real objective here.

Do we really think North Korea is going to give up its nuclear capabilities and its missiles because we threaten it? They consider that essential to regime survival.

CAMEROTA: Right.

CLARK: Do we think that if we put them in a position where it's use it or lose it that they won't really think about using it because it's about regime survival. CAMEROTA: Right, but does that mean. I'm sorry to interrupt, General, but does that mean -- I mean --

CLARK: So we really need to think about what our objective is.

CAMEROTA: Right. And so, are you saying you would be comfortable living with a nuclear North Korea? That we should just get used to them having nuclear weapons.

CLARK: I say we better think about that really hard before we back them into a corner where they feel like they're going to be destroyed by us if they don't use nuclear weapons.

So when we say it's intolerable, what's -- what are we willing to do? Here would be one way to deal with it.

CAMEROTA: Yes.

CLARK: They say it's intolerable, I say fine. Leave the Korean Peninsula, turn it all over to us, and you won't have to worry about it. And once you leave, then we promise we'll get rid of our nuclear weapons.

Would we accept that? I don't think so.

So we have to know what our objective is. We have to speak very directly in very measured, deliberate ways to them at the top level, privately.

CAMEROTA: General Tata, what are your thoughts?

BRIG. GEN. ANTHONY TATA (RET.), U.S. ARMY: Well, Alisyn, I think the president has been very clear, I think Sec. Mattis has been very direct, and I think Sec. Tillerson has been very diplomatic.

And it is unacceptable for this regime -- you know, which President Bush called a member of the axis of evil with Iran and Iraq. And what you've got now is the capability because of the passivity of the past and kicking those cans down the road -- this quote unquote "strategic patience."

[07:35:14] President Obama so anesthetized the United States population into believing that that were no threats. There were no threats from ISIS, no threats from Islamic extremism --

CAMEROTA: Yes.

TATA: -- no threats from North Korea.

And now, all of a sudden, we have intercontinental ballistic missiles. We've got miniaturized nuclear warheads that can be put on those ballistic missiles --

CAMEROTA: Right.

TATA: -- that can range -- CAMEROTA: Right. So, what now?

TATA: -- Chicago, they can range Denver.

And so I think what you do is you continue the synchronization of elements of power, and that's what you're seeing this administration do is deliberately synchronize economic elements of power.

They got a -- they got a unanimous vote from the U.N. to begin to squeeze North Carolina (sic), cutting by 25 percent their exports. And then you begin to leverage Russia and China. China is the key here. The information --

CAMEROTA: Right, which hasn't worked thus far.

TATA: -- apart -- well, you know, we're six, seven months into this thing whereas, you know President Obama ignored it for eight years. So now, what we've got to do is bring this thing to a head because it's unacceptable for North Korea to have, you know, nuclear weapons that can range the United States. It's just unacceptable.

CAMEROTA: OK.

TATA: And so, we've got -- we've got to have a -- work toward a solution. And I think the information elements of power that are at play here, the economic, the diplomatic, the political and, of course, the military --

CAMEROTA: Yes.

TATA: And we're flying the B-1 bombers, we're showing flexible deterrent options that I know Gen. Clark knows about. And so we're doing all of that right now and --

CAMEROTA: And you think that that will make North Korean and Kim Jong Un stand down?

TATA: Well, you know, President Trump offered to talk to Kim Jong Un. He said under the right circumstances I'm happy to sit down and talk, but this is not what North Korea wants. What they want is to continue to have the world stage --

CAMEROTA: Yes.

TATA: -- and they want this attention.

And, of course, China is feeding into this and they're being duplicitous about it --

CAMEROTA: Right.

TATA: -- of course.

CAMEROTA: So --

TATA: And so, that is part of the three-dimensional chess we're playing here.

CAMEROTA: Yes. Let me bring in Gen. Clark again.

General Clark, if they do fire these intermediate ballistic missiles into the waters off Guam does that necessitate a response or could that just be chalked up to another test?

CLARK: Well, I think that has to be worked very carefully inside the interagency and brought up to the president as to what we do about that. But I think it starts with direct dialogue, private dialogue with the leader of North Korea.

When we were engaged in this in 1994, President Clinton sent President Carter over there and we headed off a nuclear crisis.

CAMEROTA: Yes.

CLARK: In 2002, when the administration realized that the North Koreans actually were moving toward a separate path for getting nuclear weapons, the Bush administration continued to focus on Iraq. And had they been really determined to stop proliferation of nuclear weapons it wouldn't have been an invasion of Iraq, it would have been serious concentration on North Korea.

CAMEROTA: Yes.

CLARK: That wasn't done then.

CAMEROTA: I understand.

CLARK: But we've worked steadily on anti-proliferation, so this is no surprise. This has come for a long time. We have to think what our objective is here.

To simply say it's impermissible, that's fine for public talk. But when you get into it privately with North Korea and you say well, what are the military options, there are no cost-free military options --

CAMEROTA: Right.

CLARK: -- and we shouldn't make ourselves believe that there are.

CAMEROTA: Yes.

CLARK: This is not a matter of snapping your fingers and saying well, I'm going to turn the military loose and they'll fix it. That's not -- that's not the case here.

CAMEROTA: Yes.

Gentlemen, we're out of time but what I hear you both saying is, of course, blaming some of the predecessors for getting us into this mess, but also that you both favor some sort of direct talks. And that's interesting and we'll see whose names rise to the fore for that.

Thank you both for being here -- Chris.

TATA: Thank you.

CHRIS CUOMO, CNN ANCHOR: As we're following this mystery unfolding in Cuba -- this bizarre attack that's left two American diplomatic staff with hearing loss and concussion-like symptoms. We have a live report from Havana on this acoustic attack.

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[07:43:15] CUOMO: So there's this mystery unfolding at the U.S. Embassy in Havana. The State Department believes several of its diplomatic staff members were targeted by a covert acoustic attack that left them with hearing loss and concussion-like symptoms.

CNN's Patrick Oppmann, our man in Havana, Cuba, with more on this bizarre story.

Patrick, it's good to see you, as always.

First, help us understand what is an acoustic attack?

PATRICK OPPMANN, CNN CORRESPONDENT: Absolutely, Chris, and it sounds like a mystery straight out of a spy novel.

You know, it's called an acoustic attack but these diplomats, while they were being submitted to these high frequencies probably weren'teven aware of it. It's not something that you can hear. These are such high-level frequencies that they're not audible and they're used a lot of times by spies to soak up information, hear conversations -- essentially, eavesdrop.

But in this case, what appears to have happened is that they can be very powerful frequencies and they cause concussion-like symptoms.

One diplomat apparently has permanent hearing loss. So about a half dozen people got here in Havana -- U.S. diplomats working here got very, very ill as a result of this and the U.S. has expressed its displeasure to Cuba. Essentially said, in diplomatic speak, knock this off, leave our people alone.

And has now, in May, expelled two Cuban diplomats to essentially tell the Cubans that they're sending a shot straight across the bow. So this is something that for months these governments have been talkingabout. Cuba has been denying it but now it is becoming a full- fledged diplomatic incident, Chris.

CAMEROTA: Patrick, I'll take it. Thank you very much for trying to explain this very peculiar story. Thank you.

Meanwhile, it's time for "CNN Money Now."

The escalating tensions with North Korea breaking the rise on Wall Street. Is that the only reason the market is dropping?

[07:45:05] Chief business correspondent Christine Romans is in our Money Center with more. What do you see, Christine?

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Good morning.

I see global stock markets down and Wall Street finishing lower for two days in a row now. This is in response to the mounting tension between the U.S. and North Korea.

You know, for months, Alisyn, stocks have coasted to record highs shrugging off geopolitical concerns, but this news has investors showing signs of caution.

For example, when you look at gold, a typical safe haven, it's up more than one percent, a two-month high there. And, Wall Street's fear gauge, something called the VIX, is up 21 percent this week.

The U.S. dollar, once a safe bet in the global economy, is down eight percent this year.

And, North Korea isn't the only catalyst for this little drop we've seen on Wall Street. Some of it's due to Disney shares. They fell after pulling out of a deal with Netflix. And there were a few disappointing earnings reports.

But overall -- I mean, the overall context here, profits are very strong this season and all three major stock market averages are still up by double digits this year.

Defense stocks, by the way -- they profited greatly from Trump's tough -- President Trump's tough rhetoric, by the way. Shares of Lockheed Martin and Raytheon hit record highs, Chris.

CUOMO: Christine, appreciate it.

ROMANS: You're welcome.

CUOMO: Thank you very much.

So, Senator Ron Johnson says that Obamacare needs to be repealed and replaced. The big question is, well, how? How do make it better?

He is a businessman. He says he has done the math. He has charts to show you what the problem is and how to fix it, next.

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[07:50:45] CUOMO: All right.

So, Sen. Ron Johnson thinks to get to a consensus on health care the country needs to start talking about how it actually works, what the details are.

I know, it sounds like broccoli. I don't want to do the homework. Too bad, this stuff matters.

And we asked him. Come on, bring on your math, bring on your charts, and let's have a real discussion about how the senator believes you could repeal and replace Obamacare and make it better for people like you.

He joins us now. Senator, thank you very much. Let's get through some of your big points.

SEN. RON JOHNSON (R), WISCONSIN: So, this is the morning broccoli here, huh?

Let's start with just the basic fact of what our health care system is. We spend about $3.2 trillion. You know, the largest percentage is in hospitals, doctors, and clinics, home care nursing. That's about two-thirds of what we spend. Insurance, administration, and drugs is about 20 percent.

And the point I'm trying to make here because I hear it all the time -- well, if you just get rid of the profits from drugs and insurance companies you'll solve the problem.

Well, we've done a pretty good job at estimating this. We think it's about $135 billion out of $3.2 trillion -- 4.2 percent. So you could take away the motivation of innovating from drug companies and not have new drugs and you still wouldn't solve our health care problem.

CUOMO: All right, but also, you can't take profits out of --

JOHNSON: No.

CUOMO: -- a capitalist society.

JOHNSON: I don't think you should.

So again, I just want to dispel the myth that our problem isn't profits in drug companies and insurance companies. The problem lies in an inefficient delivery system fueled by the fact that, you know, people really aren't paying for it. But we'll get to that in the next chart.

Let's just take a look at how, basically, people get insurance. The vast majority of people are employer-sponsored group policies largely unaffected for the time being by Obamacare. But again, Obamacare is primarily Medicaid and Medicaid expansion for able-bodied, working age, childless adults putting at risk, from my standpoint, traditional Medicaid for the elderly, disabled, and children.

Obamacare is primarily about the individual market, a very small slice. About five percent of the American population is in the individual market and yet Obamacare's faulty architecture was causing that small slice of the American population to bear the full social cost of covering people with high costs and preexisting conditions. It didn't work.

Now --

CUOMO: Well, wait. Hold on a second. Just to like make some points that matter.

First, on expenditures, just quickly. JOHNSON: Yes.

CUOMO: Yes, you can't take profits out of capitalist society -- true. But you can go at the businesses about what they're charging and why these costs are so high, specifically on drugs. I know you want to work on that.

JOHNSON: Right.

CUOMO: You know, why they arecharging so much for these drugs.

JOHNSON: Because --

CUOMO: It's not about their profits --

JOHNSON: Because --

CUOMO: -- it's about what they put in the cost structure.

JOHNSON: Because we've taken consumers out of the equation. Back in the forties, 68 cents of every health care dollar was paid for by consumers -- the patient. Thirty-two percent was funded by insurance and government.

Look what's happened now today. A little over a dime -- 11 percent now is paid for directly by the patient, the rest is covered by government insurance. So the fact of the matter is because you don't have consumer-driven price competition where consumers are demanding, first of all, to know what things cost. They don't know, they don't care because somebody else is basically paying.

Now, we care deeply how much we pay for insurance but that is so far removed from what is actually happening at the provider level. And so, again, consumer-driven price competition works in every other area of our economy --

CUOMO: I know, but this is --

JOHNSON: -- but it doesn't work in health care.

CUOMO: Accept that health care isn't like anything else, right?

JOHNSON: Right.

CUOMO: The idea that competition will make it better, we haven't seen health care that has been greatly improved from a cost perspective because of competition.

JOHNSON: But --

CUOMO: People need health care.

JOHNSON: But Chris, we have.

CUOMO: It's much more expensive. It's something you need even if you think you -- JOHNSON: Yes.

CUOMO: -- don't need it.

JOHNSON: Obviously, you're not going to go and price out what happens, you know, for a provider when you have a heart attack.

But when you're getting Lasik eye surgery, you do. And so the result of that consumer-driven price competition and the quality of Lasik eye surgery is increased, the prices come down. It works.

It will work in a large segment of our health care system. Not 100 percent, maybe 50 --

CUOMO: Right.

JOHNSON: -- maybe 60, but that would really restrain costs.

Look at what -- look at what happened with HSAs, Health Saving Accounts, because people with higher deductible plans -- CVS, Walgreens, Walmart developed walk-in clinics where you can go and get your kid's ear infection --

CUOMO: Right.

JOHNSON: -- diagnosed for $35.00 versus the emergency room at $200.

CUOMO: Right. But that's another thing that factors in is that one, a health care savings account is only good if you have the money to put into it.

Two, that one of the reasons you've seen a big change in this metric is that health care's so much more complex now. It used to go that if you had to get your appendix out, God forbid, they went in there, they cut you open, they took it out, and that was it.

[07:55:09] Now, they have all these tests and things --

JOHNSON: Right.

CUOMO: -- that go into everything. So you're getting more care and there's more cost.

JOHNSON: Yes. Endoscopic surgery stands to reduce this cost because it reduces the hospital stay -- how you supply that market.

But let's go -- let's go on to what I was continuing to emphasize about the faulty architecture and what Obamacare caused.

The first chart here shows what the trend line was in premiums prior to Obamacare. Back in 2013, an average American about 40 years of age was paying $232 per month. Because of Obamacare, and this is according to HHS, premiums increased 105 percent nationwide, up to $476.

And here's the new trend line. So we doubled that trend line in health care.

And one thing I laid out for our Senate colleagues who are crowing about the fact that hey, the Senate bill would reduce premiums 30 percent to the trend line, we're still not bringing it down to where we should.

If we actually did a root cost analysis of what caused this trend line to increase -- and we have the answer on that because HHS commissioned a study by McKenzie.

Here's just one example, Tennessee. Their premiums tripled in Tennessee for a 40-year-old male --

CUOMO: A non-expansion state.

JOHNSON: -- from $104 to $431 per month.

CUOMO: A non-Medicaid expansion state.

JOHNSON: Precisely, but here's the main cause. Insured risk, which is guaranteed issue covering people with --

CUOMO: Right.

JOHNSON: -- preexisting conditions and community rating.

Chris, here's the good news. You can actually cover people with preexisting conditions like Maine did. They didn't even repeal guaranteed issue, they supplanted it with invisible high-risk pools. This is what their premiums were prior to --

CUOMO: Right.

JOHNSON: -- implementing invisible high-risk pools. This is what they went to. This is a third of what it was prior to.

CUOMO: Right.

JOHNSON: That's about a half, so --

CUOMO: So you've got to do that --

JOHNSON: -- they cut premiums in half to two-thirds by instituting an invisible high-risk right.

CUOMO: But in -- right, which is a great phrase, right, invisible high-risk pools.

JOHNSON: Well, there -- you know, are the high-risk pools.

CUOMO: But, you know, there are two things. One, they put an assessment on. It was like four bucks per person. And two, they have a different demographic perspective than you have in the country overall.

That's why Susan Collins, you know, one of the senators from Maine, said the money that you're putting into these Senate bills right now to try to effect what they did in Maine is not nearly enough.

JOHNSON: Well --

CUOMO: You'd need much, much more money. It's very expensive to do high-risk pools.

JOHNSON: Well, this shows it works. We had a high-risk pool in Wisconsin that worked very well.

We can work on the details of that but the point being is what Obamacare did is forced a small percentage -- about five to six percent of the American population to bear that full --

CUOMO: Of disproportionate cost.

JOHNSON: That fair -- that full social cost of covering people with high-cost, preexisting conditions. What I'm saying is spread it out over everybody.

Yes, do an assessment. That's how Wisconsin's high-risk pool was funded. Premiums, plus assessment on insurance companies, which they spread over the rest of the population.

It's a fair way of doing it without tripling insurance premiums. Which again, if you -- if you make too much money -- these are the people Bill Clinton was talking about.

CUOMO: Right.

JOHNSON: The people busting it, working 60 hours a week, their premiums have doubled or tripled and their coverage cut in half. That's unfair and they were the --

CUOMO: It is.

JOHNSON: They were the forgotten men and women of Obamacare.

CUOMO: It is, but there's one question that we can take up the next time which is you seem to be making a very strong case for what needs to be fixed. But why do you have to repeal and replace what's already there when a lot of it is working to deal with what you admit, in two different charts, is a small slice of the people affected who are being disproportionately hit by costs?

Why not fix that --

JOHNSON: Because it was --

CUOMO: -- and not scrap the whole thing?

JOHNSON: Because it was guaranteed issue and community rating that caused premiums on the national average to double in Tennessee -- triple. We need to address that honestly.

Now, we say repeal so you can fully replace with something, so maybe it is fix. You know, I've been talking quite some time. Repair the damage done by Obama --

CUOMO: You guys wouldn't talk about fix.

JOHNSON: Well, you know, I did, OK? I was talking about it all the time.

So, repair the damage done by Obamacare --

CUOMO: That's why you're here alone.

JOHNSON: -- and start transitioning to something that works, which is what I'm going to use my committee for over the next few months to lay out these realities hearing after hearing. Do a problem-solving process. Start the information to find the problem, lay out the reality, set achievable goals.

This is an achievable goal, Chris, which we completely ignored during the Senate debate.

CUOMO: You'll have to plow through the politics because they like repeal and replace. Now you have the president beating you over the head with that promise, making it the bar.

Maybe this is the way to go. Do it incrementally, fix what the problems are. We will follow it every step of the process.

JOHNSON: Appreciate you --

CUOMO: They're saying --

JOHNSON: giving me the PowerPoint. This is fabulous.

CUOMO: They're saying that John King may have competition, and it is embarrassing to me that in your first time out you're way better at using the wall than I am. But, Senator, thank you.

JOHNSON: I'm a business guy.

CUOMO: Hey, and you know what? This is an important conversation. Thank you for helping us along the way.

JOHNSON: Thank you for having me on.

CUOMO: Absolutely.

All right. There is a lot of news this morning.

Did North Korea just cross what the president said was a red line and, if so, what will fire and fury mean?

Let's get after it.

(BEGIN VIDEO CLIP)

ROMANS: North Korea responding to President Trump's rhetoric with another specific threat against Guam. BARBARA STARR, CNN PENTAGON CORRESPONDENT: The North Korean statements say the U.S. president let out a load of nonsense about fire and fury.

SARA MURRAY, CNN WHITE HOUSE CORRESPONDENT: Those were the president's own words.

SEN. CHRIS VAN HOLLEN (D), MARYLAND: We need to be firm and steady, not popping off the way the president did.

REX TILLERSON, SECRETARY OF STATE: I think Americans should sleep well at night.

UNIDENTIFIED FEMALE: The United States is on the same page.

UNIDENTIFIED MALE: A serious threat that's taken as a bluff can be catastrophic.

UNIDENTIFIED FEMALE: CNN has learned of an unannounced raid on Paul Manafort's apartment.