The MacNeil/Lehrer NewsHour

MR. LEHRER: Good evening. I'm Jim Lehrer in Washington.

MR. MAC NEIL: And I'm Robert MacNeil in Denver for the second day of our series on how government works and what America expects from it. Tonight our focus is health care reform. But immediately after the News Summary, the deepening crisis in Bosnia. NEWS SUMMARY

MR. LEHRER: President Clinton announced a new three-part plan on Bosnia today. It was prompted by accelerated Serb attacks on the Muslim town of Gorazde. The plan includes an expanded threat of air strikes against the Serbs in six safe areas, including Gorazde, and stronger enforcement of sanctions against Serbia. He said he also discussed a common diplomatic initiative with Russian President Yeltsin and NATO leaders. He said senior diplomats would work out the details soon. Mr. Clinton spoke about the U.S. goals in Bosnia at his White House news conference.

PRESIDENT CLINTON: Working with our allies, the Russians and others, we must help the warring parties in Bosnia to reach a negotiated settlement. To do that, we must make the Serbs pay a higher price for continued violence so it will be in their own interest more clearly to return to the negotiating table. That is, after all, why we pushed for NATO's efforts to enforce the no-fly zone in the Sarajevo ultimatum and to provide close air support for U.N. forces who come under attack.

MR. LEHRER: The bombardment of Gorazde did continue today despite a truce accord signed late yesterday. Aid officials said the town's hospitals suffered a direct hit, killing at least ten people, wounding fifteen. Another 14 people died when shells crashed into nearby apartment buildings. A United Nations spokesman said, in all, 44 people have been killed since midnight Tuesday, including 15 children. We'll have more on the story right after this News Summary. Robin.

MR. MAC NEIL: Richard Nixon remains in critical condition tonight at a New York hospital. The 81-year-old former President suffered a stroke Monday evening that left him paralyzed on the right side and unable to speak. Last night, he developed swelling of the brain, which his doctors describe as a serious threat. They said his prognosis was guarded, and the next hours would be critical.

MR. LEHRER: The space shuttle "Endeavour" landed at Edwards Air Force Base in California today. Heavy clouds prevented a scheduled touchdown at the Kennedy Space Center in Florida for a second straight day. During their 11-day mission, the crew used advanced radar to make three-dimension maps of the Earth. Construction of new homes and apartments was up more than 12 percent last month, the Commerce Department reported today. The increase was a continuing rebound from a big plunge in January due to bad winter weather.

MR. MAC NEIL: The U.S. has revived plans for large scale joint military exercises with South Korea. They'll take place this fall unless North Korea stops blocking full inspections of its nuclear program. The decision followed talks in Seoul between Defense Sec. Perry and his South Korean counterpart. The U.S. believes North Korea is trying to build nuclear weapons. North Korea denies it and has condemned the war games as a provocation. Adm. Frank Kelso won Senate approval last night to retire at a four-star rank. The 54 to 43 vote was closer than expected. All seven women Senators wanted Kelso reduced to a two-star rank as punishment for his role in the Tailhook sex scandal. Kelso denied knowing what went on but was criticized for a lack of leadership. Retirement at a two-star rank would have cut his pension by nearly $17,000 a year.

MR. LEHRER: Danny Rolling was sentenced today to die in the electric chair for the murder of five Florida college students. A county judge in Gainesville followed a jury's death penalty recommendation. Rolling admitted killing the Gainesville area college students during one week in August, 1990. He also pleaded guilty to sexual battery and armed burglary charges.

MR. MAC NEIL: That's our summary of the top stories. Now it's on to President Clinton and the Bosnia crisis and health care reform as seen from Denver. FOCUS - NEW POLICY

MR. LEHRER: President Clinton's announcement on Bosnia is our lead story tonight. Speaking at the White House late this afternoon, Mr. Clinton deplored the new Serb attacks on Gorazde and offered a three-step plan to do something about it. We'll have reaction and analysis after this excerpt from the President's news conference where he described U.S. policy options.

PRESIDENT CLINTON: First, we are proposing to our NATO allies that we extend the approach used around Sarajevo to other safe areas where any violation should be grounds for NATO attacks. I have insisted that NATO committed itself to achievable objectives. NATO's air power alone cannot prevent further Serb aggressions or advances, or silence of the gun. Any military expert will tell you that. But it can deny the Serbs the opportunity to shell safe areas with impunity. Second, we will work with others to pursue tighter sanctions through stricter enforcements. The existing sanctions on Serbia have crippled Serbia's economy. In light of recent events, there must be no relief. Third, we are taking other steps to relieve suffering and support the peace process. We are offering the United Nations assistance in addressing the humanitarian crisis that is now severe in Gorazde, and we expect the Security Council to take up a resolution authorizing additional UN peacekeepers which we will support. These steps support our intensive work, along with others, to secure a negotiated settlement. Let me reiterate what I have said often before. The United States has interests at stake in Bosnia, an interest in helping to stop the slaughter of innocents, an interest in helping prevent a wider war in Europe, an interest in maintaining NATO as a credible force for peace in the post Cold War era, and in helping to stem the flow of refugees. These interests justify continued American leadership and require us to maintain a steady purpose knowing that there will be difficulties and setbacks and that in this world where we have a set of cooperative arrangements not only with NATO but with the United Nations there will often be delays that would not be there were we acting alone or in a context in which our security were immediately threatened. Ultimately, this conflict still must be settled by the parties, themselves. They must choose peace. The agreement between the Croatians and the Muslims was a very important first step, but there is so much more to be done. By taking firm action consistent with our interests, the United States and our NATO allies can and must attempt to influence that choice. Thank you. Go ahead.

TERENCE HUNT, Associated Press: Did President Yeltsin make any objections to this expanded use of NATO air power, and are all the NATO allies on board on this, such as Britain and Canada?

PRESIDENT CLINTON: Well, first of all, we are still involved in our consultations about it. Secondly, I don't think I can commit President Yeltsin to a course until he sees our proposal in writing. I can tell you in general what he said, however, which was that he agreed that the present understandings for air power were in effect and that the Serbs finally violated their agreement and overreached in Gorazde, something he's already said publicly. But he feels, as everyone does, that over the long run NATO air power alone will not settle the conflict. This conflict will have to be settled by negotiations. Let me tell you the argument I made to him and the argument I want to make to you, because I know a lot of you have been as frustrated as have we by what happened in Gorazde. We have through NATO three separate authorizations for the use of air power, and air power has been used under two of those three. And arguably, the possibility of air power has been successful under two of those three, but they're not the same. Option Number -- Authorization No. 1 is to enforce the no-fly zone. We have done that, and planes have been shot down, as you know. And I think the no-fly zone clearly has been successful in preventing the war from spreading further into the air and the slaughter coming from the airplanes. Option No. 2 was the Sarajevo option, i.e., a safe zone was created around Sarajevo and all heavy weapons either had to be withdrawn from the safe zone or turned over to United Nations personnel. Then any heavy weapons shelling within the Sarajevo safe zone by anybody could trigger NATO air strikes. There were no NATO air strikes under that, but it clearly worked and it was clearly more enforceable. Option No. 3 was what you saw at Gorazde. Option No. 3 gives the United Nations commander the authority to ask for United Nations civilian approval to ask for NATO air support to support the U.N. forces on the ground when they're under duress. Now, consider what the difference is between that and the Sarajevo option, and all the conflicts that came on. First of all, you have to go through the approval process, which came quickly the first time when the U.N., the NATO planes went in, the United States planes, and took the first action. But then you have to keep coming back for that approval, and you're always subject to an argument about who started what fight and what the facts were. And then what happened to us in Gorazde was if an assault results in having the NATO forces close at hand with the aggressing forces, or if NATO forces are captured, then any use of air power may lead to the killing of the very people we're there trying to protect.

MR. LEHRER: Now, three different perspectives on what the President said. Jeane Kirkpatrick was ambassador to the United Nations in the Reagan administration. She's now a senior fellow at the American Enterprise Institute. William Hyland is a former deputy national security adviser in the Ford administration, former editor of "Foreign Affairs Magazine," now a professor at Georgetown University. Jim Hoagland is a columnist for the Washington Post. Mr. Hyland, what do you think of the President's proposal?

MR. HYLAND: Well, I think within what he said there may be the glimmer of some hope which is sounds like the summit conference proposed by Yeltsin. But the air strikes, the sanctions, more U.N. troops, it sounds like more of the same, and I think it's way late in the day. The options are really coming down to probably a settlement, which means the Serbs are going to win and the Bosnians are going to lose, or I think the United States is very close to getting in this war on the side of the Bosnians.

MR. LEHRER: And is it that stark a choice? Do we either get in the war, or we get out? There's nothing in-between?

MR. HYLAND: Well, we have tried almost everything, and I think Gorazde and the events of the last two weeks or the last two months in Sarajevo show that there's not much left. The limited air strikes don't seem to work. They're not very effective. They don't impress the Serbs. There's no clear settlement on the table. The Russians now, I guess, are coming around to our view that something has to be done. But I don't think Yeltsin will support the Clinton plan for five -- liberating five cities. And if that's true, if my analysis is accurate, then what is left? I don't see much left, other than imposing a settlement by all the powers through a summit conference or starting an air campaign that is the first step to a real war.

MR. LEHRER: Amb. Kirkpatrick, how do you see what the President said? What's your reaction to that?

AMB. KIRKPATRICK: Well, I'd like to react actually to what Bill Hyland just said, if I may.

MR. LEHRER: Okay. That's fine. It's your choice.

AMB. KIRKPATRICK: I'd like to say that I think instead of having tried almost everything, we've tried almost nothing, and we've done quite a lot of talking and some discussing. We've tried a couple of pin pricks. We certainly haven't had air strikes. Air strikes haven't even been authorized, in fact. Maybe something called air strikes has been, but not the way Boutros-Ghali's describing, not offensive, not real air strikes. Now they're talking about real air strikes. We have, in fact, I think -- I think Bill Hyland takes the view either we must go into a full scale war, or we must do nothing on grounds he sees nothing to be done not because of what's happened. That was -- Bill's been taking that view right from the beginning.

MR. LEHRER: Right here on this program several times.

AMB. KIRKPATRICK: Right here on this program, that's right. And I've been in other conversations with him and other -- this program and other programs and he said the same thing. And it's time, in fact, to try, it's time to try something different, some much more decisive kind of action. The problem with what I call the Hyland solution here is that it's no solution, and not only can we not use troops to impose an unjust settlement on the Bosnians, but if we did, the Serbs would simply move on to Kosovo, Macedonia, Albania, where they, in fact, are already moving in any case.

MR. LEHRER: Well, let's move from the Hyland solution to the Clinton solution then. What do you think of what the President proposed today?

AMB. KIRKPATRICK: Well, I like it a lot better than the Hyland solution.

MR. LEHRER: I had figured that one. Why? Do you think this is something?

AMB. KIRKPATRICK: I think it's something. I don't know whether it's enough. I think it's something. I believe personally very strongly that we need to lift the arms embargo as well. I would add -- and the President would --

MR. LEHRER: He said that.

AMB. KIRKPATRICK: -- himself prefer to do that. And I think that's what we should do, but I think the President's proposals are a rather large step in the right direction.

MR. LEHRER: A large step in the right direction, Jim Hoagland?

MR. HOAGLAND: Well, I think what's still missing there is an overall sense of a strategy of how the President is going to get to where he wants to get and exactly where he wants to go. He --

MR. LEHRER: You don't think he laid that out today?

MR. HOAGLAND: I really don't. He indicated by all of the things that he said that American interests in Bosnia are very limited and that the steps that he's going to take will be limited as well. He talked about the need for a negotiated settlement and achievable objectives. But I don't see how you're going to achieve the objective of making Gorazde a safe haven now that the Serbs have taken it. And that's one of the things he said. It's one of his objectives, so you've got a certain amount of delusion right there. I think -- I tend to agree with much of what Bill Hyland said. We've reached a turning point. We've reached the point where we really need to choose whether we're going to intervene in this war against the Serbs and say that a Serb military victory is unacceptable, or we have to work really hard now to bring this war to an end. I prefer that solution.

MR. LEHRER: Do you think what the President suggested today is, in fact, intervening in the war? If he is successful in getting the allies to go along with this, is it an intervention, or is it not?

MR. HOAGLAND: Of sorts, and of a very limited nature. It is not an intervention that inflicts any pain, any military pain, on Serbia, which is really backing this war, and where you would have to change the political conditions before you can bring this war to any kind of acceptable level of fighting. I don't think it does that, Jim.

MR. LEHRER: Bill Hyland, do you think that -- what do you think the Serb reaction to this is going to be? This is always -- everything that's happened -- Amb. Kirkpatrick would say very little has, but what little or lot has happened has all been designed to get the Serbs to do something, and they've always disappointed, at least from the American and the Western point of view. What do you think they're going to do this time? Is there any way you can predict that?

MR. HYLAND: I don't think you can predict it. What they did over the last 10 days in my view is very dangerous. You don't tug on Superman's cape. I mean, for the Serbs to attack Gorazde, to lie to the U.N., to lie to Yeltsin, I think that's very dangerous. And that suggests to me someone who may be somewhat out of control. And I think that's worrisome.

MR. LEHRER: You don't see any rational plan behind that?

MR. HYLAND: Yes, I think there is. You can say they wanted to take Gorazde because it has some strategic value, but the way they did it, and to lie to Akashi and to lie to Yeltsin --

MR. LEHRER: Akashi is the U.N. representative, right?

MR. HYLAND: The U.N. representative.

MR. LEHRER: Yeah.

MR. HYLAND: And Vitaly Churkin left saying, you know, he's fed up.

MR. LEHRER: Who's the Russian representative.

MR. HYLAND: Representative. And even Yeltsin apparently told the President on the phone today that he was coming around to the President's view. My objection, I guess, or my worry is that if you take the President's plan at face value, he's talking about five areas which will be subject to the Sarajevo model. Every -- all Serbs pull back, turn in all of their heavy weapons, or we'll bomb you, that -- if the Serbs say no way, then you are in the war.

MR. LEHRER: My recollection -- correct me if I'm wrong, Amb. Kirkpatrick -- my recollection -- it wasn't asked at the news conference -- my recollection is under the Sarajevo model, they could bomb -- they didn't have to bomb the targets. In other words, if somebody fired an artillery round into Sarajevo, they didn't have to go after the artillery piece, they could go after some other, some other Serb target that wasn't directly related to that, am I right about that?

AMB. KIRKPATRICK: That's my understanding.

MR. LEHRER: That could be quite an escalation.

AMB. KIRKPATRICK: Let me just say that -- but it's interesting to call with the wrong decision, because the fact of what he proposed was to provide -- make safe havens a safe haven. Now --

MR. LEHRER: They've already been --

AMB. KIRKPATRICK: That's kind of important. But there is something else at stake here, and this whether the United Nations action will be left with a shred of credibility. These towns that the President is proposing to protect have already been declared safe havens, and that's one of the things that makes it -- I agree with Bill Hyland about that at least -- it's really extraordinarily provocative, even strangely provocative that the Serbs have attacked so heavily safe havens precisely at a time that the United States and other powers seem to be so engaged there, and more of us seem to be moving from artillery towards still other safe havens after they secured Gorazde, very provocative behavior. But it's not a new idea to make a safe haven safe.

MR. LEHRER: Yeah, but that's a very good point that we should have made earlier, that these are not five new places that the President has just chosen from the map. They've already been declared that. Jim Hoagland, where did -- where did all the miscalculation come from on the relationship between the Serbs and the Russians? Most people believe -- the conventional wisdom was that the Russians could deliver the Serbs on any given day. Wrong.

MR. HOAGLAND: It turns out to be wrong. Last week, after the pin prick bombing raids around Gorazde, I asked senior officials in the administration how do you expect this to produce a negotiated settlement? Bombing somebody normally doesn't. And you heard the President say that again today. The answer was, well, we're hoping that the Russians will be able to use their leverage on the Serbs, they will be able to deliver the Serbs. The Serbs basically called the Russian bluff too as they called the American bluff and as they called the United Nations bluff. It turns out that they think that they're in a position where nobody is really going to take the responsibility and pay the price for forcing them to back down. And so far, they've been proven right.

MR. LEHRER: How should this new approach be measured in terms of whether it works or not? Is it -- all the attention is now on Gorazde. Is that where it should be?

MR. HOAGLAND: Certainly the attention immediately is on Gorazde. A major humanitarian tragedy is occurring there. Shelling continues today at an accelerated rate. People are dying. How do you measure the success? It will, I think, depend in large part on how President Clinton spells out these goals in his letter to Yeltsin and his presentation to his NATO allies. We were talking about these safe havens. In fact, the safe havens can already be protected. The United Nations has said that member states can use all necessary means. What strikes me is the President continues to be very reactive in his approach to Bosnia and builds in time delays almost as if he's hoping that events will avoid having to make hard choices. There's really no need to go back again and again to ask for new permission.

MR. LEHRER: Bill Hyland, you used the picture of the Serbs pulling on Superman's cape, and is there anything to be afraid of? Has anything happened thus far where the Serbs say, hey, I'd better not do this again? Is this the time for them to get a stronger message? Are they going to continue to do it?

MR. HYLAND: It's certainly time to give them a stronger message. I think what the President said today was a very strong message. That's why I really think that the United States has got to fish or cut bait. The United States is going to either go into this war in a rather strong way -- I mean, the bombing that they're talking about will have to be effective bombing, it can't one or two iron bombs on a tent, or it's going to have to decide that the war is over and that it's going to get together with the other powers and say, this is it, we've lost.

MR. LEHRER: What about -- how do you -- Amb. Kirkpatrick has declared herself, as she has in the past, on the -- lifting the arms embargo. The President said today, yes, he favors it, but he also immediately said, yes, but our allies will never permit it. So is that pretty much a dead issue? What do you think about that?

MR. HYLAND: No. I think it's probably the last resort. I think once you decide to arm the Bosnians -- and we would have to arm them and train them -- we're talking about a lot of weapons and a lot of training and a long period of time. We're talking about a new war. I'm not against that, but I think it ought to be part of a strategy that says, we failed, we're now going to have to go to war, and I think that's a drastic move that the President has got to go before the Congress for.

MR. LEHRER: Do you think that's where this thing could be heading, Amb. Kirkpatrick?

AMB. KIRKPATRICK: Well, actually, I hope so in a way, because I think that -- I have never -- I don't support committing U.S. troops to a ground war in Bosnia, I never have, or even peacekeeping in Bosnia, in fact. But I very strongly believe that it was a terrible mistake to deny Bosnians the capacity for self- defense through that arms embargo. It was a really, you know, really terrible thing to have done to them, any people. The U.N. Charter is perfectly clear about the inalienable really right to self-defense of nations, inherent they call it, which is inherent, inalienable, and I think that, that I have always believed that if we lifted the arms embargo, helped them with some arms, I don't think the whole burden for supplying arms needs to fall on us though and the training. You know, they've got some other trainings, for example, Turkey to name a country. And they've got some other friends, as well, around the world, the Pakistanis and some others.

MR. LEHRER: But there are other steps down the road?

AMB. KIRKPATRICK: There are other steps. Anyway, we can't -- look, the problem is that we can't simply stop. This is the problem because it's going to get worse, and nobody is going to be able to quite stand -- stand by as it gets even worse, and while the Serbs undertake expanded invasions and aggressions which they're going to do.

MR. LEHRER: All right. We have to leave it there. Thank you all three very much. SERIES - FOR THE PEOPLE - HEALTH CARE

MR. MAC NEIL: Next tonight, the second part of our new series on how government works and what Americans expect from it. Tonight in Denver our focus is on health care reform. We begin with this report from Correspondent Betty Ann Bowser.

MS. BOWSER: Exercise and trying to stay in shape are an everyday part of life in Colorado. A survey released this week ranked Coloradans the 13th healthiest in the nation, taking into account a variety of health factors. They run. They bike. They roller blade. And while many Americans may spend a Saturday morning in their den on a treadmill, it's not unusual to find somebody here climbing straight up the side of a mountain. But accidents happen. People get sick, and these days taking care of them is big business. In fact, the health care industry accounts for 34 percent of all the new jobs created here last year. Like the rest of the nation, most people in Colorado have some kind of health insurance. But 1/2 million people in the state live day to day with no coverage. That means 1/4 of the women who give birth in the state get no prenatal care, and it means in some parts of Colorado, low birth weight and infant mortality are a problem. The average family in Colorado currently spends about $5,000 a year on health care. That's almost the identical amount the average American family spends each year. But the percentage of income the average family spends on medical expenses is going up rapidly. In 1980, 7 percent of the family budget went to health care. Today that figure is closer to 15 percent. And like most Americans, Coloradans are worried about what's going to happen if they get sick, and what's going to happen with health care reform.

TRISTON MARSHALL: I'm paying $130 a month just for myself and my own major medical. See, I'm from England, so I was used to having my own socialized medicine, not worrying about it. You know, when you have an ear ache when you're a kid, your mother takes you to the doctor and he checks you out and examines you, and you don't have -- he gives you, okay, you've got an infection in your ear, here's a prescription, go to the drugstore, and there's no bill, there's no prescription charges. You know, as you -- you're raised with that, so you get used to it. But along with that, and along with anything that's free in life, I've found, people abuse it. And I see that on my stand. Themore fixings I put out here that are free, people take advantage of that, and they abuse it, and I think with health care it would be the same.

CARMEN GARCIA: I have no medical insurance. I guess all I can say is that I hope anything that happens to me happens in my automobile because my auto insurance will cover it, and I can afford that. But health insurance, I wanted to have a child and I didn't. I will some day, but the doctor wanted $2,000 and the hospital wanted $2200 a night. So if I got out in one night, then it's $4200. But if I was there for two nights, then it was $6400. And I can't afford that. Then when I looked at the insurance, I couldn't afford the insurance anyway, and a lot of times it was cheaper to pay the $6,000 than it is to pay for the insurance, because I don't know when I would get pregnant, and it was just real difficult.

DOTTI AMBER: I'm glad there's going to be an upheaval. The whole business of the liability of doctors and the liability of hospitals has -- has caused expenses to get so far out of hand. I remember a case where an elderly man tripped over a hose and fell and bumped his head, and he's a man toward the end of his life, and he was given a CAT scan. And CAT scans are very, very expensive. It wasn't just a matter of observe him and see that -- as it would have been in the old days -- you'd have put him in the hospital and watched over him for 24 hours to make sure that nothing, nothing went wrong. But he had a CAT scan, and I'm sure that was to protect everyone involved as well as to find out if he was really all right, which he was happily. I do think things have gotten out of hand on the liability side.

VANESSA BROWN: I'm a full-time student. I do work at Dairy Queen. I think that it's terrible that the full-time people I work with do not have health insurance. I think they ought to be forced to insure their employees, because we don't have that many full-time employees, and for the ones that we do have, I think that she should definitely pay for them to be able to go to the doctor, because when they get sick, they have -- they take time off from work. So it's going to cost her any way that she looks at it.

JOHN WHITE: I would not make it a requirement that every company offer health insurance to their employees. It should be a matter of choice. As a small businessman and not an employee, but an employer, my interests lie with maintaining a healthy company for myself and my employees. Every opportunity that reduces my ability to be competitive and make choices inhibits my ability to compete effectively in the marketplace and, therefore, not only affects the employee that may have a health claim, but it affects all of my employees. And so my biggest gripe is that I need something workable to help me become more competitive.

MR. MAC NEIL: While the process of legislating national health care reform grinds on in Washington, across the country, the way Americans receive their health care is already undergoing rapid change. Tom Bearden reports on the trends in Denver.

DR. BRUCE HAYWARD, Family Practitioner: (examining little boy) I'm just going to poke at you. Tell me if it hurts any. Ooh! That hurts, huh?

MR. BEARDEN: Dr. Bruce Hayward has been a family practitioner for 15 years. He became a doctor because he wanted to help people get well. But things have changed in medicine, and he doesn't like it very much.

DR. BRUCE HAYWARD: We, especially as primary care people, are being required to act as gatekeepers more and more. The patients are kind of funneled through us if they're going to specialists or funneled to us to manage their care.

MR. BEARDEN: Many of the changes doctors like Hayward are grappling with were brought about by the explosive growth of managed health care. Managed care is a term that covers a variety of different health care programs. The idea is to try to control costs by setting limits on what an insurer will pay for items like doctor fees, certain hospital procedures, and lab tests. For patients, the big difference is they can't just get care anywhere. They must choose from a list with plan-approved doctors, specialists, and hospitals.

DR. BRUCE HAYWARD: We couldn't get his MRI, because the insurance didn't approve it, right?

UNIDENTIFIED WOMAN: Yes. Insurance didn't approve it, right?

DR. BRUCE HAYWARD: Right. Well, they said, the one insurance said no, it's the auto accident insurance, and the auto accident people said no, it's the health insurance people. And so they ended up cancelling it altogether, right?

MR. BEARDEN: Only about 10 percent of Denver's population belonged to managed care programs a decade ago. Now just over half do. And some believe that will soar to over 90 percent in just the next two years. That means competition for Denver's 1 million insured citizens is fierce. A few years ago, the only form of managed care in Denver was the HMO, or Health Maintenance Organization, like Kaiser Permanente. HMO's were usually one stop centers for most kinds of care. Now Kaiser is getting some competition.

ERIC SIPF, Take Care of Colorado: The HMO industry has gone from 20 million people in 1980 to almost 50 million people in 1994.

MR. BEARDEN: Eric Sipf is the president of Take Care of Colorado, the state's largest managed care organization with more than 300,000 members.

ERIC SIPF: We have a saying in our business that people vote with their feet, and they keep moving right into HMO's, and if we weren't doing a good job, we would be losing those members at a pretty rapid rate. So I don't, I don't buy this argument that we contribute to the problem. I think we've contributed to putting in the frame work for the solution.

SPOKESPERSON: I want to welcome you, Dr. Pearlman, to Take Care as a new physician. You're joining an existing practice that has already belonged to us for quite a number of years.

MR. BEARDEN: They aren't limited to their own buildings. The company negotiates contracts with doctors such as pediatrician Mark Pearlman and with hospitals to provide services for their members. Because they control so many patients, they can demand discounts and pass those savings on to their members. In some cases, the insurers have negotiated flat fees for physicians, X number of dollars per month per patient to take care of all their health needs. They also control the kind of services their members can get. They specify which treatments are acceptable and how much they will pay for them.

DR. PEARLMAN: And if we find out, for example, that there's a new procedure called or code or that there's a new vaccination that we're beginning to use in pediatrics and it's not in the system, how do I go about either informing you or finding out what we're supposed to do?

SPOKESPERSON: What I'll do is I will pass the information along for our, our on-staff pharmacist who reviews and then makes some appropriate pricing decisions that will give the physicians that extra reimbursement.

MR. BEARDEN: For Dr. Hayward, the big difference under managed care is that he's spending more time and money filling out forms and less time on medicine.

DR. BRUCE HAYWARD: I'm not sure that I would have gone into medicine at the start of medical school knowing things would be the way they are now. I'm not a business person. And I'm having to become a business person.

MR. BEARDEN: He used to have two employees to handle the paper work required by insurance companies. Now he has six. Hayward chooses to deal with 12 different insurance companies, each with its own rules. For instance, some insurers require that blood samples from their patients be sent to a specific laboratory. If Hayward sends the sample to the wrong lab, then he won't get reimbursed. Managed care also means a substantial turnover of patients when employers change their insurance companies, preventing Hayward from developing the traditional long-term family physician relationship he values.

DR. BRUCE HAYWARD: It's kind of a joke around here that in January all the patients shift. You know, we get a whole bunch of new ones that I happen to be on their insurance and their old doc wasn't, and a bunch of them who were my patients but I'm not on their new insurance -- out they go.

MR. BEARDEN: The insurance companies also now require Hayward to do something he often finds uncomfortable, tell patients they can't see a specialist.

DR. AIRELL NYGAARD, Orthopedic Surgeon: (talking to patient) Now you see that darker color down at the base of it? That's bone.

MR. BEARDEN: Older insurance schemes allowed people to make an appointment directly with the specialist, like orthopedic surgeon Dr. Airell Nygaard. Today managed care usually requires patients to see their family practitioner first. They're referred on only if the family doctor can't handle the problem. That means far fewer patients will be seeing specialists and 2/3 of the doctors in Denver right now are specialists. Even more ominous to specialists, Take Care recently eliminated the names of fully 1/3 of the orthopedists on their approved list, cutting those doctors off from future referrals for that huge group of people. Recently, Dr. Nygaard and his partners merged with three other clinics purely as a defensive move against these sorts of developments. Nygaard's newly merged mega group will be able to market itself to insurance companies for future referrals primarily through a joint computer database. It will allow them to document their costs and medical outcomes of treatment for their patients, information some insurance companies now require before they'll put a practice on their list.

DR. AIRELL NYGAARD: I think too often physicians are, are at the end of the power issue when it comes to controlling what happens to a patient, and probably the patient is even lower yet. And one of the things that we want to see happen as our merger goes forward is that the patient have an advocate for him and her for their medical care and that economic decisions not always be the factors that drive what happens to a person with his or her problem.

MR. BEARDEN: Hospitals are feeling the pressure just as much as doctors. Denver's Rose Medical Center recently entered into an alliance with two other hospitals in order to eliminate duplication of services and reduce costs. Such alliances and mergers not only help hospitals sell themselves to insurance companies, it also puts some in the position of selling their services directly to consumers, in effect, becoming one stop health shopping centers. Jeff Dorsey is the new chief executive officer of the Rose Medical Center Consortium.

JEFF DORSEY, Rose Medical Center: All of the change processes are going to try and force people to be more accountable for their own health. They're also going to have to accept that you cannot balance total freedom of choice with lowest possible cost.

MR. BEARDEN: Dorsey says the alliances and mergers will lead to a 50 percent reduction in hospital beds in Denver, beds that have been mostly vacant anyway due to a decade of overbuilding. Take Care's ERic Sipf believes the mergers will spell the end to what he calls "a medical arms race."

ERIC SIPF: Ten years ago, every hospital in town wanted to have the latest piece of equipment, CAT scan or MRI or whatever new technology existed or was available, and I see in the future that there's going to be more collaboration on the part of providers, hospitals, physicians, so we can provide a more economical and a more efficient health care system.

MR. BEARDEN: The health care scene in Denver is intensely fluid. Competition is creating new health care institutions and laying old ones to rest. And just around the corner is some type of national health care plan. Dorsey says Denver is prepared for whatever government has to offer precisely because of all those changes.

JEFF DORSEY: I don't see anything that's going on right now from a federal or a state perspective, frankly, that would alter any of what we're trying to accomplish. I think that the alignment of the system, partly aligning it both institutionally and with our physicians, serves as a tremendous accommodation really to whatever changes would come out of Washington.

MR. MAC NEIL: Earlier today, we assembled a group of residents and medical students from the University of Colorado Medical Center. Joining me in the anatomy lab, Steve Hindes, a second year resident in family medicine; Tom Hopkins, a second year resident in internal medicine; Elizabeth Amick, a first year resident specializing in neurological surgery; Halee Fischer, a fourth year medical student, she begins a pediatrics residency next year; and Owen Ellis, also in his last year of medical school, he starts his anesthesiology residency next year. In this Tom Bearden report that we've just seen, there's quite a lot of discussion by those, those doctors of the move to managed care. And there's been a lot of it here in Denver, as there has been elsewhere in the country, and even without a big plan coming from Washington already, this is already happening. And so there's a whole new emphasis on primary care. What do you feel about that? Who would like to start on that, on primary care as opposed to specialties?

HALEE FISCHER: Actually, I'll speak on primary care. Going into pediatrics, the state of Colorado recognizes primary care as family practice and general internal medicine, pediatrics, ob-gyn, and I believe there's some debate whether or not psychiatry is going to be considered a primary care specialty. I think the whole concept of the primary care physician is very much like that report stated. You act as a gatekeeper. I don't know if I'm comfortable with that role, but I think in the cost effective system, we need a person that is able to make the clinical decision to start at a point, to say we need to order this test, makes cost effective, okay, this is beyond my capacity, and I will refer this on to a specialist.

DR. STEPHEN HINDES: The term gatekeeper is an interesting and a controversial term because it comes from the sub-specialist's perspective of where are my patients coming from, they're coming from somebody else. The fact is very, very few patients, about one in twenty-five, need to be referred to a specialist after seeing a primary care physician, so the primary carephysician's maine role is to diagnose and to treat and to cure and to manage the patient. Very seldom is a referral necessary. Primary care has been shown in many other countries to be a very, very cost efficient way to provide excellent medical care.

MR. MAC NEIL: But what is this going to do to the specialists, like yourself, and the tendency up till now -- we heard it again in the piece -- of the American consumer wanting to go to the specialist right away?

DR. ELIZABETH AMICK: Right. And I think the way the whole American public has been in the last several years is they feel that they deserve the best, and the best is the sub-specialist, go directly to the sub-specialist, circumvent the primary care physician and go directly to a sub-specialist, but that's going to change. And I think part of the health care reform is training the American public or educating them that the primary care physician can treat and diagnose a majority of the illnesses that are out there, and what we, as sub-specialists, have to do is to trust the primary care physicians to know what their limit is to say at this point I don't know, I need to refer you on to sub-specialist.

MR. MAC NEIL: And for the patient to trust the primary care. I wanted to bring you in -- you actually changed the focus of your studies here under the influence of this growing interest in primary care.

DR. TOM HOPKINS: I wanted to make a point. I have, and I think that if you try to design a plan that's going to offer basic universal comprehensive health care, you've got to have that person as, as a gatekeeper. You have to have those physicians who are going to be best to screen people. If the goal was to have everybody have -- work on immunization, prenatal care, et cetera, you need a physician who's going to be trained in that to know how to screen out people and know when to refer, because I think that it's -- we're talking about basic -- we're talking basic universal comprehensive health care. We're not talking about someone who falls down on their knee knowing that it's an orthopedic problem, that they need to go to an orthopedist right away. I think that skips over that whole link.

MR. MAC NEIL: But tell me how you changed your own plans.

DR. TOM HOPKINS: I guess the way I changed my plans was knowing that managed competition is going to occur and that if I, I have an ideal that everybody should get universal basic health care, if I want as a physician, if that's why I went into medicine, that in order to serve that, the people, that I need to be a primary care physician, in order to screen out and diagnose the treatment and know when I run into a problem, if it's a urological problem that I can't handle, I pass on --

MR. MAC NEIL: But you were going to be a cardiovascular surgeon.

DR. TOM HOPKINS: Well --

MR. MAC NEIL: You were --

DR. TOM HOPKINS: The reason why was my wife, I think that was the thing.

MR. MAC NEIL: She thought you weren't earn a good living?

DR. TOM HOPKINS: She thought I wouldn't be at home very much. No. I think that was really why I changed.

MR. MAC NEIL: How do you feel? You're going to be a specialist, a very necessary specialist.

OWEN ELLIS: I guess I agree to a certain extent that we can't have everybody going to specialists just because they want to go to specialists. On the other hand, this is America. The plans that are being advanced right now, and certainly the managed care that exists right now, not only can you, are you not supposed to see a specialist, you can't see a specialist, and --

MR. MAC NEIL: Directly.

OWEN ELLIS: Directly. And you can't -- if your primary care physician -- if you don't to see a specialist, you cannot see one.

MR. MAC NEIL: So in other words, it's not the big plan, whatever it's going to be, coming from Washington which is going to deny people direct access to specialists. That already exists for millions of people now under HMO's and under managed care. (group agreeing)

HALEE FISCHER: In Denver, I think we're very -- as Americans, we're very spoiled. We have a headache, and we'll go see the neurologist. If we have chest pains, we go to see the cardiologist. And basically, with the managed health care program, you have to go to your primary care doctor first, and then you have to get a referral. If I look at you and say, you know, why don't we start from ground zero and work with this and try some drugs and take some time, and it may take a couple of months and we'll try to figure this out, a lot of people aren't satisfied with that, and they scream, I am being denied my fundamental right to see my specialist.

DR. STEPHEN HINDES: Let me say this. I feel like we're perpetuating some of the major misunderstandings of the health care problem here. No. 1, one of the major problems with our system right now, the limitation of being able to see a specialist is not because HMO's are denying that they can go there, it's because many, many, many towns in this country, a very large percentage of the population, live in small towns, just ten, twenty thirty thousand people in the county, and this cannot support a multi- specialty practice. The actual need, regardless of what the physicians want, the actual need is for primary care people that can handle the great breadth of pathology and of disease. You simply can't have an obstetrician, an internist, a pediatrician, and a psychiatrist in every county. It just doesn't work that way.

MR. MAC NEIL: May I change the focus a little bit to how, what you all think when you listen to, when you have time, listen to this debate going in Washington. For instance, what do you think about the debate between is there a crisis in health care delivery now, or is there not a crisis?

DR. TOM HOPKINS: I say there is not a crisis. I really think that term is just overused, I really, I really do. Right now we, the majority of Americans, I mean, they do have access, they do get care. They go to emergency rooms. I don't think that they're turned around. I don't think there's a crisis per se. I think that there is -- it's come a time when we're talking about when you're looking at the working uninsured, those people, that group of people who don't have good health care, so I think that the focus has to be taking, looking at our mistakes and making some changes.

DR. STEPHEN HINDES: I disagree very strongly. I really think there's a crisis. And let's look at objective information. We have the worst infant mortality rate of any industrialized nation. We have the worst rate for immunizing our children of any industrialized nation. 50 percent of all pregnancies in this country are unintended. Across the board we are failing on objective indicators of health status. Thirty-seven million people have no insurance. Almost 70 million people are inadequately insured. This is a crisis.

DR. TOM HOPKINS: Those are only three points you make. There's probably about 50, I think, very positive things that are happening.

DR. STEPHEN HINDES: Not true. Let's look at the Robert Wood Johnson Foundation that analyze many, many criteria, and the U.S. is below on every one.

HALEE FISCHER: But is that a problem within the medical institution, or is that an economic problem? I think the medical crisis per se is an economic problem as far as how is this country going to pay for it, how are we keep rolling over our debt to pay for medicine, not -- I mean, I think that Tom is right. I don't think that there's a medical crisis per se.

OWEN ELLIS: I think it is probably even deeper than that. If you're going to tell me that we have the highest infant mortality rate, most people are going to tell you that's because we get the worst prenatal care. We have 50 percent of our pregnancies unintended, and you want to lay these things at the medical profession's doorstep. It's not the medical profession. It's much deeper. This is a societal problem.

DR. STEPHEN HINDES: It is our role to educate the public, and that's where we're failing.

MR. MAC NEIL: Speaking of the medical profession, when you listen to the politicians either in the state of Colorado, in the state legislature, or in Washington, discussing all this, what do you feel about how much they know about your business and what confidence do you have in the judgments they're going to make?

DR. ELIZABETH AMICK: It's frightening. I last year had the opportunity as a medical student to lobby on the Hill with a couple of Senator's offices. We spread out -- and the organization that I was in -- the Association of American Medical Colleges -- and as representatives of the AAMC, we lobbied, and it was really frightening at their lack of understanding what it is that we go through in our training not only as medical students but in the process of choosing what sub-specialty or what we go into, they - - not that they have no concept but it's a lot of misunderstandings about what it is that we go through to get where we are.

MR. MAC NEIL: What do you think about what government knows -- what people in government know about what you do and your confident -- how confident are you that they're going to make good judgments?

DR. TOM HOPKINS: I don't think that they're going to -- if you have people not in medicine, which has been a long time, making decisions for medicine, it's not going to work. You've got to have the people who are in it make the decisions.

DR. STEPHEN HINDES: We've been doing that for 50 years --

DR. TOM HOPKINS: But the problem --

DR. STEPHEN HINDES: -- we're in a terrible situation.

DR. TOM HOPKINS: But the problem is -- no, I mean, I think that if you're talking about -- I think we have. I mean, who to place blame I'm not just placing blame. I don't think it's all physicians' fault. I came in to be a physician. I didn't come in to run medical care or health care, to change it really, so I think that the fault -- to place blame on somebody is very difficult to do. I think you've got to sit back and say, okay, now, what can we do? Government I don't think alone is going to be able to run the show. I don't think the private industry is going to be able to run the show. I think that a combination having the government either referee, set down the laws, make sure everybody abides by 'em, let the states adjust accordingly.

MR. MAC NEIL: Do you have confidence in the government -- the collective government in Washington to come up with a good plan?

HALEE FISCHER: I do not. I think government is involved in health care right now. I think people aren't aware of it. Medicare, Medicaid, VA, military health care, are all government-run health systems. None of them are very efficient. All of them over-spend. All of them have very poor records for treatment modalities versus--

MR. MAC NEIL: What do treatment modalities mean?

HALEE FISCHER: Basically physicians ordering tests for patients, are those tests needed, will those tests make a difference in the treatment plan of the person? No.

DR. STEPHEN HINDES: Don't you think right now that that's because the government has to be responsible for the many patients who are underinsured -- completely uninsured and indigent? They end up with a non-paying population base that makes the VA function very poorly. If things were at risk --

HALEE FISCHER: I'll tell you what --

DR. STEPHEN HINDES: When you move into regional alliances and the single payer system, what the Clinton health care plan and the Wellstone-McDermott plan suggest, these will work much more efficiently, because you have paying patients as well as non- paying.

MR. MAC NEIL: Do you have confidence in the government to come up with a good plan, after all this debate is over and all these groups have had their say?

OWEN ELLIS: No, I don't at all. I have yet to see the government run any large entitlement program -- and this would be a large entitlement program -- that they run very well. Social Security is perhaps in the thing that they've run, they've run a surplus, and we're still talking that in ten years everybody who's paying into Social Security now is going to be cut out, it's going to go. Welfare is abominable. Lots of people get it who don't need it. Lots of people who need it don't get it, and lots of people use it as their sole source of income for their life. And so we're talking about now we're going to take another one, and health care in this country costs $800 billion, and we're going to turn another $800 billion program over to the government to run when they've already demonstrated that they can't run any program.

DR. STEPHEN HINDES: The New England Journal Medicine has shown already that if we were able to change to a Canadian-style health system, or at least reduce the 1500 different insurance companies we already have, we would actually reduce the bureaucracy significantly, significantly, by as much as $100 billion a year. It would be a large organization, but No. 1, it would not be nearly so large as the chaos we have now.

MR. MAC NEIL: Let me ask each of you. We're just at the end of our time, and I want to ask each of you: If you'd known what was coming, would you have chosen this business, would you have started out in medical school?

DR. ELIZABETH AMICK: Since I'm on vacation this week I'd probably have to say yes.

MR. MAC NEIL: Would you have chosen this business, or has this changed your mind about being a doctor?

OWEN ELLIS: No, it hasn't changed my mind about being a doctor. It changes what I think. It's how much job satisfaction it may be and how much of a headache this job is. It's probably not going to be as much fun as it could have been, but --

MR. MAC NEIL: How do you feel?

DR. TOM HOPKINS: If you can separate all the debate and all the different ideals, I still -- I would still do it all over because there's all that satisfaction you derive from taking care of patients.

MR. MAC NEIL: Halee.

HALEE FISCHER: I went into medicine, and I'm still a student, not an intern, so I can say this, for the art of medicine and perhaps my goal then in this day and age of health care reform is to still find that little niche where I can practice at, and that's what I'm hoping for.

MR. MAC NEIL: How do you feel?

DR. STEPHEN HINDES: I'm very excited. It's a very exciting field to be involved in right now, and right now, I think we understand thatthere are a lot of misunderstandings and a lot of truths that we need to guide our health care system towards. And right now, with the Clinton health care plan we are headed that way, toward a reasonable, flexible health care system that makes sense. It's far sighted and sophisticated.

MR. MAC NEIL: Well, I'd like to thank you all very much. We have to leave it there. Thanks a lot. RECAP

MR. LEHRER: Again, the major story of this Wednesday, President Clinton said the United States and its NATO allies would step up the pressure on the Serbs in Bosnia. He said the plan included an expanded threat of air strikes an stronger enforcement of sanctions on Serbia. He also said Russia would join the allies in a major diplomatic initiative. Good night, Robin.

MR. MAC NEIL: Good night, Jim. That's the NewsHour for tonight. We'll see you again tomorrow night with Part 3 of our report from Denver. The subject is education. I'm Robert MacNeil. Good night.