♪ announcer: from our studios in new york city, this is "charlie rose." charlie: we begin this evening with the fourth leg of president trump's first trip overseas. the president was in brussels today. in a speech at the new nato headquarters, he criticized members of the alliance for failing to contribute enough to collective defense. president trump: i have been very direct with secretary stoltenberg and members of the alliance in saying nato members must finally contribute their fair share and meet their financial obligations. but 23 of the 28 member-nations

are still not paying what they should be paying and what they are supposed to be paying for their defense. charlie: against expectations, president trump declined to explicitly endorsed nato's article 5. that clause hold an attack on any one member is an attack on all. joining me from chicago is ivo daalder, a former ambassador to nato and currently president of the chicago council on global affairs. with me at the table, john micklethwait, a bloomberg editor and the former editor of "the economist." i'm pleased to have both on this program. ivo, tell me what you thought of the president's speech. ivo: thought it was disappointing, to be frank. i think there is nothing wrong for the president of the united states to come to europe and remind europeans they need to spend more on defense. in fact, every president from truman on has been doing that and doing it in the forceful way he did is perfectly fine, although perhaps you get more results if you do it privately.

but you also need to tie it into a commitment of the united states to the essence of the alliance which is article 5, this notion the united states stands foursquare with our allies when it comes to their security and defense. it was particularly important for donald trump to do this since during the campaign he had called nato into question. he called it obsolete. the allies were sitting there waiting for reaffirmation of what is a treaty commitment of a treaty signed 68 years ago. and they did not get it. charlie: john? there is a lot about this. i think he is right to point out he failed in that respect. but against that, you have to take all the things he said on the campaign. implicitly, there was a degree of eating humble pie. trump standing beside the head of nato singing its praises.

i agree it would be better if he had said something specific about article 5. you could make the point that it is wrong that all of these allies sit there and do not spend their 2%. some people say there might be better ways of measuring it than the 2%. the 2% of gdp is not a large amount to us. charlie: president obama called for it, too. john: exactly. he was not being outrageous by those standards. it has been a relatively disciplined trump approach so far. charlie: what about article 5? john: article 5 is crucial. without article 5, there is no alliance. ivo is exactly right about that. it would have been better if he had said it. against the panoply of things donald trump has said before -- you could say there was at least some enthusiasm. he came in saying nato was a disgrace and obsolete. he is there now doing things with them. charlie: why would he do this? why wouldn't he endorse article 5? ivo? ivo: i don't know.

i had expected him to do that. his aides indicated he would do it. the fact he is not able to say this publicly is concerning. it was particularly concerning at this particular moment. i think i disagree with john. this is the first visit by the president to nato headquarters. it was -- his speech was an unveiling of a memorial to 9/11. what is important about 9/11 is not only the united states was attacked that day, but the very alliance where he was standing in the headquarters the next day invoked for the first and only time article 5. as a result of that invocation, nato soldiers and europeans, hundreds and thousands of the past 16 years, have been deployed to afghanistan. they fought and died alongside americans for what is in essence the protection of the united states. that is what the alliance is all about. when it comes to whether you

care, yes, dollars matter and euros and pounds. but it is really about the solidarity underscored by the afghanistan mission. john: i absolutely totally agree with everything ivo said. i wish trump had done that. i am just merely saying relative appalling things he said about nato before, it may be a typical trump thing, he could have been cross about macron's firm handshake or any of the things that might have irritated him. charlie: i missed that. what did macron do? john: macron delivered a particularly firm handshake which seemed to shake trump. charlie: a firm handshake shook the president of the united states? john: strange thing. been alive with this this morning. charlie: it seems especially timely, article 5, at this moment because of whatever threat there might be by russia

to some of its neighbors in the balkan states. ivo: i think that is the second piece. not only is it a failure to reaffirm commitment to article 5, it is the other piece which is the failure to recognize the degree to which russia is a true threat to nato in a way that was not the case a few years ago. but with the invasion of ukraine, with the annexation of crimea, nato has responded quite forcefully to try to protect its new members in eastern europe. it has deployed troops there, including the united states. but so has germany, canada, great britain. all three of them are leaving battalion sized deployments into the balkan states. in order to demonstrate the reality of what article 5 is. the russia threat was barely mentioned in the statement the president made.

it is that combination, an unwillingness to recognize the degree to which russia does pose a danger to nato and combined with an unwillingness to declare article 5 as a solemn treaty commitment of the united states. charlie: you used to be there. you know what member states and the nato representatives think. what would you say about the reception today to the president's speech? ivo: i think there is a great deal of anxiety. this is an alliance that works in one way and one way only, which is when the united states leads. to get 28 countries to agree on anything requires somebody like the united states, a major power, to bring these countries along, to be a leader. it does not help to be a scolder when you are not willing at the same time to be leading. you are more likely to get results when you demonstrate you

are committed to get people to follow you rather than telling them in the way the president did, scolding them almost like schoolchildren, that they were not doing their part. they are not doing their part and they should be doing their part. it is something presidents have said all along. i spent a good amount of my time banking the table saying we need to do more on defense. but it has to be part of a holistic package. it is the lack of the other parts, the recognition of russia as a threat, article 5 is a fundamental treaty commitment, that undermines the message about burden sharing. john: two things. one part, he was exactly right. for many of these countries, article 5 is binary. you are either fully behind it or you are not. any kind of weakness on that has always been a problem. if you are one of those baltic countries, the idea that america will not come to help matters a whole lot.

this trip as a whole began in saudi arabia in the middle east. there it seemed to go better than most people expected. the reaction in europe has been more frosty. people are less keen to be seen standing beside trump. there are fewer cannons going off and royal occasions happening. charlie: what did you think of his trip to saudi arabia and aligning himself with israel against iran? john: he has done one thing which is interesting. historically american foreign-policy in the middle east have had this awkward thing with saudi arabia and israel as the principal allies in the region that do not agree on many things. the one thing pulling them together is the iranians. trump by making a lot of noise about that, has helped bring in the gulf. a lot of people think the iran deal is good and he should take it. there are other groups worried about it. in general with the mess in washington he left behind, you have to say it went relatively

well for him. he signed business deals. the choreography suited him. they gave him a lot of things to do. he did not have as much time to tweet. the way it was organized by the saudis and israelis worked in his favor. now he has arrived in europe. it is a harder audience. it is less about commercial deals and more about him scolding them about defense spending. it is also about them saying it is not in our interest to be seen standing beside you. you have merkel facing election. may is in an election. none of them are rushing to be seen hugging donald trump. charlie: angela merkel is hugging barack obama because he happened to be there accepting an award. john: yes, he remains a more popular figure. charlie: does it in any way -- can you imagine these kinds of

circumstances, that this iconoclastic president can somehow do something what previously was not able to do in terms of aligning forces so some kind of israeli/palestinian deal is possible? have you seen too many failures to even raise hope? >> one always hopes because clearly peace in the middle east is something both parties deserve and need to get behind. it would certainly change the character and nature of the middle east itself. if donald trump is able in some ways to rearrange the forces in a way that gets us to an agreement where others have failed, all the more power to him. in that sense, i think his commitment to this, the willingness to meet with both sides, the attempt to bring the arabs along as part of that, are all to be welcomed and

encouraged. clearly, he was coming to the middle east with a lot less baggage than he may have had in other places. particularly once he gave the speech on the importance of the muslim world coming together to stand up against terrorism. john: he starts from a good position of having the trust of the israelis, which is something if obama ever had he lost quite quickly. that is a useful thing in his pocket. the one thing donald trump has repeatedly told us is he is a dealmaker. in a sense, this is the hardest deal in international politics and has been for a long time. most people think there are elements of a deal if somebody really wants to push for it. charlie: in the speech, in the meeting with the leaders in terms of the politics we are talking about, did he somehow

overcome the reputation he earned during the campaign with banning muslim entry to the united states? ivo: i think he certainly softened his own rhetoric and made the crucial distinction between terrorists and the religion, which during the campaign he seemed to merge with a blanket ban on muslims. i think he made progress on that and clearly was embraced by a large number of leaders from muslim countries. that is to be encouraged. we want the president to learn over time where he may have been wrong and adapt to the circumstances. turning back to europe, i had expected, and i think many people were expecting him, to reflect that learning in the conversations he would have with european leaders. i think john is right. there was a higher bar here. the europeans were not

particularly anxious to be closely associated with him, particularly those facing elections. he did come with a lot of baggage. it looks like he has taken that baggage with him to his next stop. charlie: let me talk about a new leader on the world stage, theresa may, the british prime minister. everybody i know is impressed by the way she stood in front of 10 downing and said what she said with the presence she said it. john: in a sense, the crisis, it is always crude to think about these things in terms of politics, it has helped her. her appeal to the british people is to say trust me, in a somewhat angela merkel way, i am the only person who can take us through this negotiation which most people would imagine is a choice between a slightly bad outcome and a really bad outcome, the brexit negotiation. it plays into that. the stuff she said about terrorism has been very direct. charlie: where was the secretary of state in this trip? ivo: he has accompanied the president throughout the trip.

he was with him in brussels, sitting behind him at the nato meeting when they were showing the pictures. on article 5, just yesterday he said of course we support article 5. if that is the case, it should be easy for the president of the united states to say so. in some ways you have to have sympathy. this is a trip which in some ways reflects quite well in him. tillerson, mattis, mcmaster, the grown-ups in the trump organization have pulled off a relative success against a picture of utter carnage on the domestic policy side. and yet they are doing this with virtually no staff at all. the trump administration has been incredibly inefficient getting anybody through. they are working on a

shoestring. i think tillerson has some grounds for thinking he could be more rewarded than he has been. charlie: great to see you. great to have you back from chicago. we will be right back. stay with us. ♪

♪ charlie: we continue our discussion of president trump's first foreign trip with ian bremmer. he is the president and founder of the eurasia group.

i'm pleased to have him back at this table. how do you measure the success of the first foreign trip of president trump? ian: given expectations, pretty high. every step of the trip, it gets a little harder. the saudis, there is no domestic dissent. they are enormously happy trump is there. everything went according to plan. did not have to deal with questions from the media. all simple. also, the whole region came to riyadh to see the american president. that made him look presidential. that made him feel like he was on the right side. israel, netanyahu had to corral his cabinet to actually show up to see trump on the tarmac. you had a little dissent. there is open media there, but of course the personal relationship is very warm. trump had a couple of gaffes. israel at the end of the day is a strong ally of the united states. and happier with trump than

obama. then he goes to the vatican and it is more formal, more stilted, more awkward. the fact pope francis gave him the autographed encyclical on climate change is about as much get from theould pope. clearly, there was a strong message there. now we are on to brussels and nato. a lot tougher. you have a lot of allies that do not feel like trump is on the same page as them. he is pushing them on spending more on nato. you have mr. tusk saying they are not on the same page as russia for example. not clear how committed trump is committed to the alliance even though he is more committed than before. then he is going to the g-7. a broad multilateral organization that is clear trump is no supporter of. charlie: who will he see there? ian: at the end of the day, the canadians will be tough.

i think the italians will be tough. we have already seen macron at the meeting. that meeting was not easy at all. that meeting was not easy on security, not easy on europe. and macron saying he was supporting him, that is obviously not the case. the hardest part of all is the trip back to the united states where he has to deal with enormous scandals and crisis and divisiveness. i think the trip on a whole, trump could have done a lot worse. he is meeting allies. many of those allies have better relations with him than they did with obama. this is a very challenging global environment for any american president and more so by trump, much of which is self-inflicted. charlie: self-inflicted and because the perception of him is unpredictable? ian: incapable. charlie: incapable? ian: that he is not aware of a lot of the issues.

you saw when he went to the israeli holocaust memorial that what he wrote in the visitors book implied he had no idea what the holocaust really was. for me, that was the single part of the trip i found painful. yes, israel is a strong ally. we are there for them. the personal relationship is fine. nothing is going to unravel this. and yet, the american president is so far from being able to show empathy and understanding for historical context for things that matter to a lot of people around the world. so yes, they will go and give us a big show and treat us well because they feel like they have to and they should and because the relationship is more than about just one president. but these things, they are not just symbolic. they hurt. you have a president that is not

able, willing to stand up to what american values in history actually mean. i think other nations around the world are not just embarrassed by that, they are profoundly troubled by it. charlie: there was a story this week about how much debt there is in china. is this a growing issue whether respecting that china's economy can deliver? ian: the fact they got a downgrade is quite significant. there is a question about how large these bad loans are across the chinese state corporate space as well as the banking space. nobody really believes chinese growth numbers. charlie: nobody believes 6%? ian: no. i would say the economist you talk to think it is closer to 3% to 5%. they are still showing good employment. charlie: suppose it is 3%, that is half of what they say.

ian: generally speaking, the economic consensus from people who seem to know, 4%. i am not inside the numbers. what i will say is that irrespective of what the debt looks like, i am a political scientist, the ability of the chinese to forestall challenges, runs on their market -- charlie: president xi jinping wants a quiet year to focus on all the things coming up so he goes into that congress in october in a strong position so he can get the people he wants on the standing committee. ian: he does not want problems. but i would not think he wants a quiet year. if you look around the world now, there are two big things happening. one is the trump phenomenon and how it plays out. but the second is china's role in the world. and the one belt, one road summit they hosted a week ago. they had 29 heads of state show

up. charlie: how much attention did it get in the west? ian: very little. charlie: i was surprised by that. ian: i think it is the biggest thing happening geopolitically in the world right now, aside from trump, that the chinese are methodically building long-term a strategic infrastructure architecture that competes with the united states. it is not as big as what the united states did after world war ii, but it is enormously meaningful. it is definitive in asia. the countries that are not in it, it is going to be a problem for them. charlie: expansive in africa? ian: not all of africa. i was in nigeria last week. west africans like the chinese writing checks, but they do not understand what is happening in terms of infrastructure strategy on the part of china. charlie: the fact that they do not understand it does not mean it is not working. ian: i would say for them, the one belt, one road summit, they

-- they still see china as they saw china 10 years ago. they are growing, writing big checks. but they are not necessarily part of a big architecture. one belt, one road is this idea the chinese are building out infrastructure and spending an enormous amount of money to do so. it is ports, train rail, roads, i.t. architecture. behind that, it is standards. in return for giving that money, you get things like cultural exchanges. it is a bit of a grab bag from the chinese perspective. the chinese expect a level of political alignment and support and economic alignment as well. it is mostly bilateral. it is not multilateral the way americans set up institutions. this is absolutely the single biggest new geopolitical thing in the world. xi jinping is not only rolling it out and not stopping it when he is about to have his big leadership transition in the

fall, he is actually rolling out the red carpet having the first summit right now. charlie: what is going to happen in brazil? ian: i think you're going to have another impeachment. i really do. charlie: second impeachment in a row? ian: with south korea in between. my goodness. the scandal is extraordinary. you have this tape of the brazilian president with the head of the largest meat producer in the world. it turned out the tape was doctored and that the fellow that was having the conversation with the president had $1 billion of insider trading knowing the story was going to drop. the guy doing the investigation also had his own insider trade going on. it is an incredible mess. but the president cannot explain

why this corporate leader who was under investigation at the time, what he was doing in his private residence late at night without any security checks were being written down about it. he has not been able to explain any of the discussions of $500,000 in a bag that went from one of his top five advisors to this fellow. none of this is explainable. there have been big demonstrations in brazil over the past 24 hours. he called the military out to crack some heads. it feels like a desperation move. he might not be out in a week, but he will lose an immense amount of support from his coalition. and eventually, you will probably see -- charlie: how many presidents are going to go to jail? ian: i don't think lulu will go to jail. charlie: why is he immune because he has been linked to , it? ian: he has been linked to it. actually bringing him to jail implies they will be able to

have the cases to indictment. it is not clear they rise to that level. the amount of opposition, strong opposition to him from 80% of the population, given him being caught up in the corruption is immense. i think the next president of brazil, when we get to have real elections as opposed to another acting president, is an outsider we don't know right now. it can be someone who served under a previous president, but this is just a mess. there are over 100 ministers and former ministers that have been caught up in the investigation. the brazilian scandals make american, washington politics look benign, look mild. and there is no end in sight. the good thing is brazil is showing, as the united states is showing us, that these

institutions ultimately work. you have an independent judiciary that cannot be bought off and ultimately the law is supreme in the united states with trump and the investigations, i think we are finding out the same thing. charlie: when you travel around the world and people say, what will happen? will there be impeachment? asking about president trump. is there a lot there or is it smoke and no fire? what are they asking about? out of washington. they know that in the united states these are just oxsyms ofis -- par polarization and discontent and scandal after scandal. you can go on a plane for three hours and there is a whole new news story when you get off. they want to know how much of this is the united states going nuts over something that does

not matter to them, or is this something to worry about? it is something to worry about if there is instability here? ian: the thing that starts to worry me from the international community is a perspective is right now we have people that both you and i respect a lot better making some important decisions around donald trump. that syria bombing went well because you have people like mattis and mcmaster. if you ask me in a years time, -- in a year's time how , confident in my that those people will still be serving in the administration, they will not just say, we have just had it. when i saw mcmaster with stephanopoulos this past weekend, he looked uncomfortable. charlie: he dodged the question four times. ian: if they cannot get donald trump to a more normal place. charlie: this trip has been pretty good for the most part. he has been close to the prompter.

ian: that is right. that speech he gave in red, he did not -- reality -- riyadh, he did not stray. he has been much better management i would bet dollars to donuts that will not continue. people like mcmaster and mattis, they don't need this job. they believe they are doing the right thing. if suddenly it looks like their values have to be thrown under a truck, i think they will leave. if that happens and we have a crisis over north korea, over iran, russia, china, all of which is possible, i worry that in insecure donald trump who does not have people like that,

people that don't have expertise and experience, they might be more at risk of lashing out there i think we have a problem. charlie: back in a moment. ♪

charlie: the congressional budget office gave its analysis yesterday on the american health care act, which was passed by the house earlier this month. the project it will leave 23

-- it is projected it would leave 23 million more people uninsured. it will also reduce the deficit by $119 billion over 10 years. it could destabilize individual insurance markets in some states. it is expected that the senate will make major changes before moving forward. joining me is ezra klein, head of vox and peter ortzag of lazard group. let me start with you, ezra. what are the implications? ezra: calamitous. this would de-insure about 23 million people. the key thing they were looking at, republicans added language that would allow states to

waiver out of the obamacare regulations. republicans said this had no downside. they promised that it would continue to protect people with existing conditions and keep insurance markets stable. the congressional budget office came back and said no. they think about one out of six states will use this waiver capability, and in those days people will find insurance , becomes too high-priced or not available to them. they find about 1/6 of americans will live in places where the insurance market will destabilize completely. the number of people losing insurance compared to what we would expect otherwise went from 23 million from 24 million. -- went to 23 million from 24 million. that is not a great deal for the taxpayer. the senate is taking up basically a new bill. the senate is going to throw this out, more or less. it isn't clear what the relevance of this is except to allow the senate to pivot away from the house bill. the more they pivot away from the house, it makes a secondary

problem if the senate ever gets a bill that the house does not want to accept. charlie: is it the same kind of divisions in the senate as in the house in terms of conservatives and more conservatives? ezra: it is very slim in the senate. there is a much larger republican majority in the house. the senate has people what you might call the coverage caucus. in the house had the freedom peoplethat want yet more uninsured. basically to the pre-obamacare status quo. the senate has people who are concerned about medicaid and overall coverage levels. these are powerful senators. folks like rob portman and others from ohio. it also has people like senator ted cruz who want a very conservative bill. the range of opinion is extremely wide. a number of votes they can afford to lose is extremely narrow. it is considered harder to get anything through the senate than the house.

the senate is taking it a bit more seriously. the house voted on this bill before they had the score. they voted -- they voted on a bill that they did not know, they do not want to know. the senate is not taking that attitude. they have created a significant working group and trying to craft something. when you do that, and peter knows this versus better than i do you are faced with very , difficult trade-offs, and it is hard to get something right. taking it more seriously makes for a difficult process. charlie: peter how many hours do , you think you have spent on health care legislation? dr. orszag: i don't want to think about that. too many. charlie: it was a principal concern of your first word -- first four years in the obama administration. dr. orszag: it was the obama

administrations first four years. this shows how hard it is -- it is easy to talk at a bumper sticker level. when you get into details, there are unexpected surprises. one of them was you think you are creating a high-risk pool for unhealthy people. you are actually creating an incentive for healthy people to go into that pool and destabilize the rest of what you're trying to do. a lot of unintended consequences, a lot of complexity. this is not an easy topic. that is what the house legislation has demonstrated. charlie: the senate will do what? dr. orszag: the problem is there is no magic here. if you start with the thought that it is not just that pre-existing conditions are governed but that premiums should not be dramatically

higher if you're sick and if you are healthy, if you start with that principle, you have to avoid people waiting until they are sick and buying in. you need some kind of incentive or mandate. as and as you do that, you need subsidies for low and moderate income people because they cannot afford coverage otherwise. there is no magic here. that is a box that both house and senate republicans find themselves in. they know they don't like obamacare. obamacare reflects those basic precepts. they effectively have no intellectual place to go. you wind up with either a somewhat incoherent plan at the house approach or what i suspect will come out of the senate, a much lighter touch like what senator cassidy and senator collins have a -- proposed. lighter touch of the federal level and evolve much more power to the states. charlie: obamacare got a lot of things right, several important things wrong, including the launch of it. dr. orszag: everyone agrees on that. charlie: there were certain essential elements that it said,

if you like your insurance from you could keep your insurance. buzzwords like that were not true. premiums did rise. dr. orszag: here is the interesting thing. the national budget office took a lot of heat for supposedly getting obamacare wrong. the fact of the matter is they got it basically right. premiums in 2017 are within 1% of what the cbo initially estimated when the affordable care act was passed. coverage, people say the congressional budget office blew it in terms of how many people would be on the exchanges. that is right. cdl overestimated how many -- cbo overestimated how many people would end up on exchanges. that is because there were fewer

employers that dropped coverage. it was expected that firms would drop coverage. what matters is the net number of people without insurance. cbo after the 2011 supreme court ruling said it would be 30 million people uninsured in 2016, the actual number is 27 million. that is pretty good. ezra: i'm going to say what obamacare did well. -- did get wrong. among other things, the subsidies are too small. there are more radical reforms i would prefer. within the structure of the affordable care act, you needed higher subsidies to make insurance affordable, make unions in horrible -- premiums affordable. that is not a hard thing to fix. you can add more money to the system, and the system does not come in over cost if you are worried as democrats said they are about deductibles being too high. if you look at the american health care act, the republican alternative, you can get into

the weeds. what it does is simple, it takes $600 billion of money that currently subsidizes insurance for poor people and gives tax cuts to rich people. that is a literal statement of what it does. there is no magic to this. if you take money out. health care is expensive. there are ways to make it cheaper. it is hard. it takes time. if you want to make it affordable, you have to give people the money to buy insurance. if you take that money away, there is no fancy footwork you can do. the republican plan is taking $600 billion away and trying to figure out some way to keep people covered. you cannot square that circle. there are trade-offs in life. if you want to give that my in tax cuts, people are going to lose their health insurance in large numbers. that is where this will is going. the great betrayal is donald trump ran for president saying he is a different type of

republican. he said everybody would be covered, insurance would be better, deductibles would be lower, pre-existing conditions would be protected. every single one of these, this bill is breaking his promise. not arguable, just breaking a promise. not going to cover everybody, deductibles are going to go up. there is a real betrayal that people thought they were voting for an economic populist. the more this gets obscured, i think it is bad. i think it is important to get clear about what is happening. charlie: at the same time, the polls show that up until this time that those people who supported him and will be damaged by this will lose insurance and lots of other things are still supporting him at the same level. it may change over months and months when the impact of things are felt, what am i right or wrong? ezra: more or less he is at 38%. that is not great. he has lost some support among those folks, too.

he is losing some of his core supporters. when you see these special elections in montana and georgia, they are not talking about russia. they are talking about health care. that is pulling high. -- that is polling high. it is hitting the republicans hard. dr. orszag: don't forget, this is a proposal. it has not become reality. if this were to become reality, and you are talking about a 64-year-old with $27,000 in income, a $12,000 increase on average in their premiums, the political reaction would be different. it is one thing when it is a piece of paper. it is a different thing if it is happening to you or you live in a high cost state like alaska where premiums will skyrocket. the reality is different. charlie: could we have a political revolution?

dr. orszag: i don't think there is going to be a law. charlie: will there be political repercussions because the republican party promised there would be a replacement of obamacare. dr. orszag: that is right. i think that brings you back to this point, which is obamacare sort of is the republican plan. it involves ride that -- private insurance companies and tax credits and exchanges, all of that. they have no place to go substantively to back that up because this plan sort of is their plan. they just don't want to admit it. charlie: is there a place where they have affected health -- perfected health insurance? ezra: you could almost not do it worse than we do it.

i will start there. there are a lot of interesting models out there. people like different ones. the highest performing model is france where you get a basic level of insurance, and the state gives some people supplementary insurance, and other people by themselves. conservatives like singapore. it is interesting. they had a supercharged visual mandate where they force you to save a large percentage of your paycheck to cover health bills. then they have a universal catastrophic plan that most people buy into. the one thing all these countries have in common is that they set prices centrally. every single developed country except for the united states. the government says here is how much an mri is going to cost, how much xanax is going to cost.

that is the key thing that makes all of them cheaper. when it is cheaper, you have a lot more room to design insurance. charlie: we had been assessed saying that republicans are horrified about the government setting the price. dr. orszag: right. ezra is right. the reason u.s. health care costs more is not because we do more, it is because the prices are much higher. if we take for granted that we are not going to intervene directly in some way to set the prices because we have a different history, there is still so much we can do to try to get more efficiency of health care that we are not doing. ultimately, if you want to focus on driving premiums to reasonable levels, you have to focus not on mixing up who is in

the pool and the subsidies, but on the underlying cost of care. we can do a lot more on the price of it and the efficiency of it. absolutely. we have been making some progress. the untold story of obamacare is that -- when i was in office, it was widely said obamacare fixes coverage but doesn't do anything on cost. the fact of the matter is we did everything we could think of -- ezra: except regulate prices. dr. orszag: except regulate prices. it has turned out better than i could hope for. medicare costs continue to grow much less rapidly than they have in the past. this year they are up 3% in nominal terms. the result is a much better debt trajectory for the whole country. there is a whole agenda that this debate misses. there are 10 times as many americans with coverage through their employer down on the exchanges. for them what will matter is whether we are attacking the problem. ezra: the only thing i was going to say in response to senator

sass, republicans are repelled by the idea of price setting. charlie: mandating insurance, too. ezra: yes. there is a more honest debate we could be heading. there is a consistent, coherent, in some ways persuasive conservative case. if you regulate prices in america where we are the single largest market for health services that you would hurt innovation badly. if it would be cheaper, it is not worth hurting innovations. what it implies is that the direction you are going is more expensive health care. in order for america to have this world leading innovation and for the rest of the world to free ride off of our innovation, which they do. then we need to be willing to

conservatives right about that. put more money into our health care system to keep this going. liberals believe you should have single-payer, and medicare negotiates prices somewhat. medicaid negotiates prices somewhat. that is the debate we should be having between the liberal vision of price regulation through the government, which is cheaper, and the republican version of health care which is maybe you need to spend more, but you have more innovation and more consumer choice. but we don't have that. charlie: have we seen whether the republican model of more innovation works? dr. orszag: we do subsidize medical innovation the rest of the world. the question is how. we have historically just paid for whatever comes along. we paid for very minor improvements. there is one gets the that is

high cost -- plenty of stuff that is high cost that doesn't do much. how to remove to where we are not just paying for more, but we are paying for better. we have been going down this path. the big risk is that path has been led by the government, by medicare and medicaid, they have been moving the system away from paying for quantity piecemeal and towards paying for value. we conducted a survey of 300 investors and executives in which they expect, 55% expect payments in the u.s. to be these value-based versions by 2020. the key question is that requires continued government effort to push in that direction. the current secretary of health and human services has been quite agnostic about whether he would put any weight behind continuing down that path. it is essential, even in their vision of health care. if you don't do this, nothing else you do will be affordable. charlie: can you imagine this, looking at the principles of how you see a free society, looking

at the principles of how you feel about a civil society and the society that is humane, that these reconciliations will take place, so we will have a health care plan that works in both a tax access and cost? ezra: i would like to believe on the 15 to 20 year timeframe. obamacare put us on this path. if hillary had one, we would be continuing on this path more or less steadily. we are going towards access and coverage being more or less completely solved if not much improved. i don't think health care will be as cheap as in our competitor nations in any near-term timeframe. because of the absence of regulation, but even past dependence is a powerful thing. you would have a huge disruption.

i think we could get it down, and we are doing a better job -- we could be doing a better job. i think that if there is anything you are saying that gives me a little hope, there is a different baseline in this country now. you're supposed to protect people with pre-existing conditions. i think the fundamental question of what is the government's responsibility to its citizens and our responsibility to each other has moved towards being a little more salt. you see folks like senator cassidy and senator snowe taking this more seriously. i think compared to where we were 15 years ago before the affordable care act and some of these understandings were built into law, we are at a better

baseline. dr. orszag: i am an optimist. i think in 10 years we will have a health care system that is much more digitized and much more personalized in the sense of not just something works on average, but it works for you in which scheduling and billing is not as annoying. the good part of all the inefficiency that exists in health care today is that we can slow the growth rate and maybe even reduce costs without harming the quality of health care that people get. i am an optimist. charlie: thank you. think you very much. -- thank you very much. thank you for joining us. ♪

alisa: i am alisa parenti from washington. you are watching "bloomberg technology." let's start with a check of your first word news. president trump is the holdout among the g-7 leaders on the climate change issue. german chancellor angela merkel said the leaders made it clear the u.s. must live up to previous commitments to the paris accord. trump says he will not be rushed into a decision. the u.s. has taken full responsibility for leaking information from monday's bomb attack in manchester. secretary of state rex tillerson arranged a visit to london to apologize, saying the special relationship between both countries will withstand this breach of trust.