The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight Mark Shields and Paul Gigot analyze today's elections; Terence Smith examines how the campaign played out on the Internet; Susan Dentzer updates the story of the HMO's and Medicare; Elizabeth Farnsworth asks why there's no pro basketball on this opening day; and David Gergen discusses the life and legacy of Thurgood Marshall. It all follows our summary of the news this Tuesday.% ? NEWS SUMMARY

JIM LEHRER: There were elections of various kinds today in all 50 states. Thirty-six governorships were at stake, along with thirty-four Senate seats, and all four hundred and thirty-five seats in the U.S. House of Representatives. Republicans predicted they would retain control of both chambers of Congress, where an impeachment and trial of President Clinton could play out next year. Earlier today, Mr. Clinton urged all Americans to vote. He spoke to reporters before a White House meeting on international economic matters.

PRESIDENT CLINTON: There are an unusual number of exceedingly close races. I can never remember a time when we had probably eight Senate seats within a few points one way or the other. And it appears to me almost three dozen House seats are within two points one way or the other. So in large measure it will depend upon who makes the effort to vote today. We are going to elect a Congress that will deal with the challenges of Social Security, and whether it can do reform and how, the 21st century, that will deal with the Medicare challenge, that will deal with the challenge or providing an excellent education opportunity to all of our people.

JIM LEHRER: There were also ballot initiatives in some states on issues, such as late-term abortion, gay marriage, and affirmative action. We'll have more on the elections right after this News Summary. In Central America today the death toll continued to rise in the areas devastated by Hurricane Mitch and its heavy rains. We have a report from Paul Davies of Independent Television News.

PAUL DAVIES: More than 48 hours after the original mudslides and flooding that killed so many, the survivors are still waiting for help to arrive. In this area of Honduras they cling to rooftops, waving frantically at every passing aircraft. Other communities have completely disappeared beneath the mud that claimed as many as 5,000 lives in Honduras alone. In Nicaragua there are similar scenes of devastation and the same desperate need, rescue teams only now starting to reach the more isolated areas, collecting the injured and transporting them to hospital. From every stricken district there are harrowing stories of loss. In this village called Posotelga in Northern Nicaragua, a young boy returned from running an errand to discover that everyone else had disappeared with the mud. Another small boy from a neighboring village talks of a wave of mud that swept away his mother and father, leaving him alone. Central American governments are appealing for international help. With road links cut, they say the priority is getting more aircraft to fly food and medicine to those cut off by the floodwater.

JIM LEHRER: There was more bad flood news in southern Kansas today. A levee on the Arkansas River broke, forcing 2,000 people in Arkansas City to flee. One person was presumed drowned. In Augusta, 400 families spent a second day in a shelter. They might have to stay there through the week city officials said. Most of the downtown remained underwater. The rough weather caused millions of dollars in damage in Southern Kansas and in Northern Oklahoma, where one person died. Top US officials worked today to end the standoff with Iraq over United Nations weapons inspections. Defense Secretary Cohen met with his British counterpart in London and then went to the Persian Gulf for meetings with Arab leaders. King Fahd of Saudi Arabia said he would not permit US military to launch attacks on Iraq from Saudi bases. Secretary of State Albright spoke to reporters in Washington after discussions with Germany's new foreign minister.

SEC. MADELEINE ALBRIGHT: We are going to insist that Saddam Hussein live up to his obligations. We have in the past used a combination of diplomacy in the threat of the use of force. We are consulting about other options. And I believe that the best kind of diplomatic action is when we can combine it in this kind of a situation with the potential of the use of force.

JIM LEHRER: Iraq continues to maintain that it's only protecting its sovereign rights by keeping the inspectors at bay. On the space shuttle story today, the "Discovery" crew retrieved a 3,000 pound satellite. It was launched earlier in the week to help scientists study weather patterns on the Sun. It captured 1200 solar images in its two days of free flight. The astronauts used a 50-foot robot arm to grab the satellite and return it to the ship's cargo bay for Saturday's trip home. And that's it for the News Summary tonight. Now it's on to Shields & Gigot, Internet politics, HMO's and Medicare, no pro basketball today, and a David Gergen dialogue.% ? FOCUS - ELECTION '98

JIM LEHRER: The polls have just closed in Kentucky and Indiana. The Associated Press is projecting Democrat and former Governor Evan Bayh the winner in the Indiana Senate race. The open Senate seat in Kentucky is still too close to call. Now on this election night analysis by Shields & Gigot, syndicated columnist Mark Shields, Wall Street Journal columnist Paul Gigot.Mark, no surprise in Indiana. Evan Bayh now will follow his father to the United States Senate.

MARK SHIELDS: His father who won that seat in 1962, beating Homer Kaypart, a conservative institution and icon in Indiana, and lost it 18 years later to a young upstart Congressman named Dan Quayle, who went on to become Vice President of the United States. Birch Bayh - has to be a great night for him to see his son, who was twice elected governor, very popular, and who beat a very, very able Republican challenger tonight, Paul Helmke, the mayor of Fort Wayne.

JIM LEHRER: Now, the Kentucky race, it's still too close to call it. Now that's an important race, in terms of the whole national picture, is it not?

PAUL GIGOT: It sure is, Jim. Look to that race as one of the ones that signals whether the Republicans gain the seats that they had hoped to gain in the Senate this year. It's an open seat - retiring Democrat Wendell Ford - and it's the South - middle South. So it's presumed to be a territory that's training Republicans, and it's the home state of Mitch McConnell, who is the only Republican to win statewide in an awful long time, and runs the Senatorial Committee for the Republicans, that has to - that helps elect these candidates.

JIM LEHRER: And the two candidates in Kentucky.

MARK SHIELDS: Jim Bunning made Hall of Fame baseball pitcher, pitched no-hit games in two different leagues.

PAUL GIGOT: The Republican.

MARK SHIELDS: The Republican and Scotty Baesler, the Democratic congressman, who played basketball at the University of Kentucky, got into a basketball duel down there. Danny Crum, the Louisville coach, in the state that's crazy about basketball, endorsed Bunning and Rick Fatino, the -

JIM LEHRER: Former -

MARK SHIELDS: The legendary coach of Kentucky now with the Boston Celtics endorsed --

JIM LEHRER: Basketball politics. We're going to have a story later in the program about professional basketball, politics of a different nature. Now no results will be available until later, but the campaign itself, Paul, how would you rate this as an exercise -

MARK SHIELDS: It's over.

JIM LEHRER: Even though the results aren't in, it's over. How would you rate this as an exercise in democracy?

PAUL GIGOT: I would say thank God it is over. It's one of the less inspiring elections I've seen that was really not about all that much. I think it was about ultimately Bill Clinton and complacency, or contentment. What you thought of Bill Clinton on the Republican side, not liking him, on the Democratic side wanting to defend him, those people came out and felt there was something at stake here because of the impeachment news and battle. But a lot of other people just probably aren't going to bother to show up. They're satisfied with the way things are. In a way, this election - and there weren't a lot of issues. There were almost no issues, other than the local ones, and things that the candidates, themselves brought up. There was no galvanizing national agenda being fought over.

JIM LEHRER: Do you agree? No galvanizing national agenda?

MARK SHIELDS: No dominant national issue. But a number of issues that were, I think, important in a number of different races. I mean, the same issues over and over - education - by the Democrats - values, and sort of ethical considerations, which were a concern to a lot of voters, which worked for the Republicans -- Social Security and Medicare and health, patient's bill of rights, which played in a number of different states, but there wasn't a single dominant issue. I think, Jim, this campaign - I'm delighted - I share Paul's delight that it's over. I've never seen as many negative and attack commercials. I live in Maryland. The governor's race there was like watching Iran versus Iraq. I mean, you just wanted it to be over. I mean, it was --

JIM LEHRER: What's caused this negative at this particular time?

PAUL GIGOT: They work.

JIM LEHRER: They work.

PAUL GIGOT: The ads work.

JIM LEHRER: When are they going to quit working?

PAUL GIGOT: Well, the other thing is when there isn't any great issue that's being fought over, then people try to pick hot buttons. So if you - if there's no - if there's no recession say, and you're not fighting - there's no great - there's not a war, there's nothing enormous being fought over, then the candidates poll, and they look and they say, ah, that - we can push that hot button. So even if a candidate like Matt Fong in California is pro-choice on abortion, Barbara Boxer, the incumbent Democrat tries to make him out not to - tries to make him pro-life and say he's too extreme, because it fits the stereotype that has been built up about some Republican candidates. So you just push those hot buttons, and they do it because it does work.

MARK SHIELDS: I think a couple of things work. First of all, there's no question, they have been effective. There's no doubt about it. And it's at a time, Jim, of divided government when there's nobody who's at all trumpeting the successes we've had as a people. There's no sense of our common achievements, whether it's in the environment, whether it's in social justice, and with the elderly, or whatever else. So as a consequence I think there is a premium on kind of - we've had every presidential candidate really, going all the way back - Jimmy Carter - Ronald Reagan - with the exception of George Bush - Bill Clinton - who's won has run against Washington. So that's in the political bloodstream. You know, they're all - everybody in Washington is on the tape, steal the hot stove and go back for the smoke, and all the rest of it. And I think --

JIM LEHRER: Steal the hot stove and go back for the smoke? Did you make that up?

MARK SHIELDS: I saved it for election night. I think this is at work. And I think there's an unwillingness to say this is what we ought to be about as a people. This is who we are. This is what we can do if we all pull together. I mean, whatever comes out of this election, there's not a sense of consensus about what we ought to do, or where we ought to go, where we ought to spend our time, our effort, and our energy.

PAUL GIGOT: I think there is a consensus. I disagree with Mark. It's that we ought not to do very much. In a way, this election is going to ratify the paralysis in the city. They're not - if, in fact --

JIM LEHRER: It's not a mandate for anything anymore?

PAUL GIGOT: If, in fact, Republicans hold our majorities but don't gain too much, the voters, I think, will be saying we give -- we don't trust Bill Clinton and the Democrats to give them complete power -- and yet we really don't trust the Senate - the Republicans enough to give them 60 seats in the Senate, where they'll be able to overcome filibusters.

MARK SHIELDS: I can't let my good friend off that easily. I mean, we're talking - if it's a status quo election, it's bad news for the Republicans. We're looking at only the third President in American history to face impeachment. We're talking about a six year itch, six years into the presidency - the last five presidents have lost an average of 48 House seats in the sixth year. Off-year elections, the party holding the White House loses an average of 27 House seats since World War II. And we're sitting here right now talking about the Republicans maybe picking up five seats, seven seats, nine seats. I mean, that is not - that is not -- in my judgment, that's no endorsement.

PAUL GIGOT: I agree with part of what Mark says. It's not going to be a good year for Republicans if all they do is break even. There's no question about that. But the number he brings up, 48 seats, that's not really relevant now because you've got - that is an average that includes years with recessions, years with wars, and years - in a time past politically when you could beat incumbents a lot more easily than you can now. It's very hard to beat incumbents now, particularly in good economic times. I think a lot of Republicans will be disappointed if they don't gain Senate seats, because they had a few lined up that they could - they should be able to pick up.

JIM LEHRER: What's your explanation for the fact that this new Congress is going to have to deal in some way - it's going to have to dispose of the impeachment issue concerning President Clinton and yet nobody ran - very few candidates ran on it one way or another, so how are you pundits going to read these results in that light?

PAUL GIGOT: Well, I'll look at Lauch Faircloth's race, the incumbent in North Carolina. That's one place Bill Clinton wasn't popular. If he manages to win, he ran an election linking his opponent to Bill Clinton. That's one. I'll look at Barbara Boxer in California. She was relatively closely linked to the President in the year of the woman 1992 and the First Lady. They put an awful lot of help in to try to get her reelected. Those two are elections I'll look at to signal what they say about impeachment. Other than that, I think that you have to read how the politicians, themselves, will read this. And a lot of Republicans out there say they're jittery. They don't want to go ahead if this is, in fact, a status quo election.

MARK SHIELDS: I think you have to throw in the New York race, Chuck Schumer against Al D'Amato, because there's no question the Clintons - the President's efforts politically were almost exclusively on the two coasts -- I mean, California and New York, as far as his own personal appearances - and some in Florida. I would also say, Jim, the Republicans are going to be forced after this election to choose between two models of governance. If you look at the Northeastern Republican governors, many of whom won in cliffhangers, Pataki, Roland, John Engler in Michigan about to win his third campaign, Tom Ridge in Pennsylvania, they have established a very successful governing pattern. The Republican Party in Congress, which is like the Democratic Party was a half a century ago, dominated by southern leadership, has not. And that's going to be the test I think for the year 2000 coming out of this, whether the Republicans are going to go toward that northern Midwestern success - Tommy Thompson in Wisconsin - and say, that's the way to run a national campaign.

JIM LEHRER: Okay. And we're going to have a lot to talk about in the next few weeks. Thank you both very much.% ? FOCUS - CYBER CAMPAIGN

JIM LEHRER: Next, politicking in this campaign via the Internet. Media Correspondent Terence Smith has that story.

GROUP SINGING: My baby is American made - born and read in the USA --

TERENCE SMITH: At a beachfront barbecue in Panama City, Florida, the "Oak Ridge Boys" are warming up the crowd for Republican gubernatorial candidate Jeb Bush.

JEB BUSH: Thank you all. Thank you so much. What a great crowd. Thank you so much.

TERENCE SMITH: A campaign aide recorded the event on a digital camera. Later that night, the latest "photos from the road" were posted on the "Jeb site," the candidate's continuously updated, state-of-the-art web page.

JEB BUSH: I get 200 E-mail messages a day. Someone is downloading my computer right now as we speak. I'll get back on the bus, and I will see what's going on around the rest of the state.

TERENCE SMITH: Welcome to the world of cyber-campaigning -- the new era of virtual politics, where everything is eventually converted into something dot.com.

MIKE CONNELL: Really, 1998 is the defining year for the Internet in politics. Let's go through that.

TERENCE SMITH: Mike Connell is president of New Media Communications, his Cleveland-based firm that designs web sites for Republican candidates -- including Jeb Bush -- and for the Republican National Committee where he makes regular visits to advise them on their web page.

MIKE CONNELL: 1998 is the wild, wild west years of the Internet in campaign politics. It is the defining year. 1996 got us into it. 1998 is a year where people are trying many different things, and nobody knows the outcome.

TERENCE SMITH: Only a handful of candidates had campaign websites up and running two years ago. This year, in the hopes of gaining advantage here at the polls, some 63 percent of all local, state, and federal campaigns are using the Internet. Among the governor's races, the figure is 94 percent.

LINDA SINOWAY: I think it's a perfect example of low-cost, high impact, you know, compared to other traditional mediums.

TERENCE SMITH: Linda Sinoway is director of interactive media at the Democratic National Committee. She believes the Internet can pay off for candidates, possibly beginning tonight as the returns are counted.

LINDA SINOWAY: Close races could be decided by the use of the Internet, depending on what the candidate and the campaign team has put into the Internet in the last couple of months.

TERENCE SMITH: Among the Democrats, California Senator Barbara Boxer locked in a tight race for re-election, has one of the more innovative web sites. It includes upcoming events and a section called Barbara's backers with a form for volunteers to sign up, and in a fund-raising first -- an online concert with Brian Wilson of the Beach Boys. By election eve, the Boxer campaign had raised 25,000 dollars on its website -- petty cash in a state like California, but a start. On many campaign websites -- you can hear and see speeches and excerpts from debates.

SPOKESPERSON: We begin with Sen. Barbara Boxer's opening state.

TERENCE SMITH: In Ohio, GOP gubernatorial candidate Robert Taft encourages virtual volunteers to call local radio call-in shows to plug his candidacy. There are even web games. Senator Russ Feingold invites his constituents to play "the shell game, " where you can add up his opponents' promises and see if there's enough money to pay the bill.

CAMPAIGN AD: If we educate children to the best possible way -

TERENCE SMITH: The Jeb Bush campaign has a section called "Marvin the Dog" with some droll canine commentary about life with the Bush family. Marvin also answers questions. It's all designed to make the page user-friendly.

JEB BUSH: I just don't see any way that a statewide campaign can be successful in the future without a web page.

TERENCE SMITH: William Harrison is the Bush campaign co-chairman for Bay County, Florida. He worked for Bush when he ran and lost in 1994, and he's back at it again this year.

WILLIAM HARRISON: We did a lot of phone work in 1993 and 1994, we got a lot of things in the mail, and so there would be as much as a week's delay and a lot of times that was fatal for us because we could not react quickly to things that would tend to spring up overnight.

TERENCE SMITH: Harrison says the Internet saved the campaign time and money. When changes in campaign strategy occurred, a stroke of the keys allowed him to send out the word instantly, instead of wasting days on the phone. Candidates began creating web pages in earnest in the 1994 electoral cycle. In 1996 Republican Presidential Candidate Robert Dole made history when he announced his campaign's website.

BOB DOLE: If you really want to get involved, just tap into my home page www. dolecamp'96.org.

TERENCE SMITH: The website was flooded with a million attempted hits and promptly crashed. With some of the kinks in the system worked out -- this year the Internet is coming of age. One of its big successes: attracting volunteers. In 1996, the Dole presidential campaign recruited one third of their volunteers via the Internet. This year Barbara Boxer attributed half of her 500 volunteers to her web page.

SPOKESPERSON: Who are you voting for on Tuesday, little lady?

TERENCE SMITH: Erik Kirk entered Jeb Bush's "get involved" page and became a volunteer with the click of a mouse. He sent out e-mails to friends asking them to attend this campaign rally in Tallahassee.

ERIK KIRK: For my generation, the Internet is the ultimate tool for candidate. If a candidate doesn't have an Internet web page, he or she is really missing the boat.

TERENCE SMITH: But do the skippers of those boats -- the candidates -- really understand the potential of the internet? Linda Sinoway of the Democratic National Committee believes the Internet will prove itself in the future.

LINDA SINOWAY: Coupled with what we learned about the technology in '96 with what we're learning now about message and, you know, it as a communications medium, I think we'll being seeing some very sophisticated uses of the Internet and web sites in 2000.

TERENCE SMITH: But candidates like Jeb Bush recognize that the Internet is no substitute for the personal touch.

JEB BUSH: You still got to say hello to people and shake hands and sign things -- can't do that over the web page.

JIM LEHRER: Still to come on the NewsHour tonight, Medicare meets managed care, no pro basketball today, and a David Gergen dialogue.% ? FOCUS - MANAGING HEALTH CARE

JIM LEHRER: The Medicare story as reported by Susan Dentzer of health unit, a partnership with the Henry J. Kaiser Family Foundation.

SUSAN DENTZER: Every weekday Meals-on-Wheels volunteer Harry Dennehy delivers lunch to homebound senior citizens in Waterford, Connecticut. But earlier this month, the tables were turned as 75 year-old Dennehy found himself in need of some assistance. He was one of just over half a million seniors -- all of them covered by Medicare -- who were told they would be dropped by their managed care plans in January.

HARRY DENNEHY: Now, all of a sudden, they are pulling out of the whole thing -- right out of the state. I hate to have them go out and drop me.

SUSAN DENTZER: Seventy-nine year-old Evelyn Sang, who suffers from lung disease, also was dropped.

EVELYN SANG: I couldn't believe it. I thought, oh, that don't mean me. They are not talking to me.

SUSAN DENTZER: Dennehy and Sang were among a number of seniors who met recently with counselor Nancy Krodel of the local Agency on Aging to discuss what to do next.

NANCY KRODEL: This is an emotionally charged issue. People are - I mean -- really upset about this, and rightly so.

SUSAN DENTZER: Democratic Senator Christopher Dodd of Connecticut lambastes the HMOs who cut off many of his constituents.

SENATOR CHRISTOPHER DODD: All of a sudden you've got people signed up and so either you let me get more money or I dump these people. You know, it's a pretty cruel trick to play on some of these folks.

SUSAN DENTZER: The episode has cast a cloud over a new program called Medicare+Choice. It was devised by Congress and the Clinton administration after a bitter two-year battle over how to constrain costs in the huge Medicare program. A truce was finally reached in the summer of 1997, when a host of Medicare reforms was agreed on as part of a package to balance the federal budget. The goals were two-fold: slow the growth of costs in Medicare, and modernize it by encouraging more seniors to enroll in managed care plans. Lawmakers thought those goals were compatible, but now it turns out that they may not have been.

CHIP KAHN: It's an inherent conflict in the program.

SUSAN DENTZER: "Chip" Kahn, incoming head of a leading health insurers' group, was one of the top staffers who worked on the legislation on behalf of Republican lawmakers.

CHIP KAHN: On the one hand they wanted to give Medicare beneficiaries more choices, and that was one of the purposes of Medicare+Choice. But they also wanted to balance the budget and constrain the growth in Medicare costs, and thus, they constrained the growth in the premiums that Medicare pays for beneficiaries, and that's part of the rub.

SUSAN DENTZER: Nowhere was this conflict more evident than in changes Congress made in the way it pays HMOs to care for Medicare beneficiaries. A carryover of the traditional Medicare program, the system is a crazy quilt of payments that vary from county to county. In 1999, these monthly per member payments will range from a low of $380 in areas like Champaign-Urbana, Illinois, to a high of $798 in places like Staten Island, New York. These differences have deterred HMOs from getting into the Medicare market in many areas. So Congress last year agreed to narrow the differences, although that will take a number of years. Meanwhile, Congress also said monthly payments to HMOs could grow by no more than 2 percent a year. That meant that in many counties, like New London, Connecticut, HMOs would be stuck for a while with the worst of all worlds: Low payments that grew very slowly. Still hopeful they could make money on the program, health plans geared up their marketing campaigns.

HARRY DENNEHY: We went to seminars, we listened to people talk, we listened to all the rosy things that they came out with. And it was, it was a much better plan than I had. I mean, I didn't hesitate at all.

SUSAN DENTZER: Beneficiaries joined HMOs because the plans provide attractive benefits not available through traditional Medicare, such as broad coverage for prescription drugs. What's more, the price of the coverage is often far lower than the combination of traditional Medicare and a supplemental insurance plan, known as Medigap. For example, the Connecticut seniors we talked with were very satisfied with their health plan, Physicians Health Services, or PHS.

HARRY DENNEHY: PHS got me these glasses. And it was a fantastic deal. Prescriptions were a big item, though, with the HMO.

OLDER LADY: Oh, yes.

HARRY DENNEHY: I mean, if you were on - like I said -- the company that I had previously, you had $2,800 a year and never provided any prescriptions. PHS came along and said, "We can do the same thing, we'll give you all these things, and we can do it for about 600 and some dollars." Well, that's $2,200 savings.

OLDER LADY: Absolutely.

HARRY DENNEHY: So, naturally, I jumped onto it.

SUSAN DENTZER: Not surprisingly, so did many other seniors, says neurologist Anthony Alessi. He heads a group of Connecticut physicians who do business with many of the health plans that pulled out.

DR. ANTHONY ALESS, NeurologistI: I mean, to give eye care, pharmacy, full benefits for some $60 a month. But, I mean, you've dangled the carrot. You have said, hey, you know, you can go to the eye doctor and get free glasses. Hi, there. Hey, you can get all the medication you need for free.

SUSAN DENTZER: Free to beneficiaries, perhaps, but not to health plans, whose costs began rising briskly. One was Oxford Health Plans. Dr. Norman Payson is the chief executive officer.

DR. NORMAN PAYSON, CEO, Oxford Health Plans: We think there's what we call in industry jargon selection bias, meaning that we tended on average to get seniors that had more pre-existing conditions, more illnesses than the average senior of the same age and sex. Plus we provide extra benefits like pharmacy coverage, and then it tends to encourage people that know they have a lot of health care needs to join.

SUSAN DENTZER: Many health plans simply began hemorrhaging money on much of their Medicare business. Payson recently told his sales force that for every dollar Oxford got from the government for Medicare, the company spent $1.10 on health care -- a recipe for big losses.

DR. NORMAN PAYSON: The Medicare situation was truly a financial emergency. The approach we've taken is that outside New York City, where we have underwriting losses, the plan was to either fix it or leave.

SPOKESPERSON: Good morning. Oxford customer service.

SUSAN DENTZER: Health plans say the government also unexpectedly saddled them with the costs of new regulations designed to protect Medicare beneficiaries. To stay profitable, many HMOs tried to cut payments to doctors and hospitals. But many of these providers were also feeling burdened by the new regulations and refused to go along. Karen Ignani, who heads the leading HMO trade association in Washington, says that plans had no alternative but to ask the government to let them charge enrollees more. In September, they asked the federal agency that overseeing Medicare to let them change pricing plans that they had already filed with the government.

KAREN IGNANI, American Association of Health Plans: The types of changes we were talking about were in the case of prescription drugs, increasing the co-pay from one to two dollars, increasing premiums in some cases by several dollars. These are modest changes which are far less than any of the direct costs that beneficiaries will face being consigned to go back to the old-style system.

SUSAN DENTZER: But the agency that oversees Medicare, the Health Care Financing Administration, known as HCFA, said no. Nancy Ann DeParle, the agency's head, made the decision.

NANCY ANN DE PARLE, HCFA Administrator: I'm sorry, you know, I'm sympathetic to the position that the plans are in. But the law is the law, and there's only so much that I can do to be flexible around that.

SUSAN DENTZER: With no other recourse, plans sent letters to beneficiaries notifying them they were pulling out of the Medicare market -- in some cases, even as their sales forces were out selling plans.

DR. NORMAN PAYSON: We waited until the last hour and we were still exchanging faxes with the hospitals to try and see if we could save a few of these counties, and we just couldn't get close enough. So unfortunately, we had to pull back. But it was hurtful for us because these members are important to us.

SUSAN DENTZER: However not important enough to risk continuing losses. So now the fingerpointing has begun. Are the health plans to blame for precipitating the crisis? Dr. Alessi says yes.

DR. ANTHONY ALESSI: This is an issue of responsibility to a community. People have come in here, done business in this community and simply walked away from the business. You don't do that in health care.

SUSAN DENTZER: Medicare expert Karen Davis says health plans underestimated the impact of the cost constraints in the 1997 Medicare reforms.

KAREN DAVIS, The Commonwealth Fund: And I don't think they anticipated how widespread the stringency would be, but in fact, that's the way the Medicare Balanced Budget Act made money. That's how it generated savings, that's how it eliminated the federal budget deficit, with tightening down both what it paid managed care plans and what it paid physicians, what it paid hospitals, what it paid home health agencies.

SUSAN DENTZER: The plans agree they made mistakes.

DR. NORMAN PAYSON: I think the industry did underestimate the costs. I can understand how that happened. Be that as it may, you know, the cost reality is the cost reality.

SUSAN DENTZER: At the same time, though, other experts believe that the Health Care Financing Administration was simply too rigid.

CHARLES "CHIP" KAHN, Health Insurance Association of America: In this case I think they really blew it. This was a very tough year. And the Health Care Financing Administration should have given them a break and given them a chance to adjust their rates.

SUSAN DENTZER: Some Medicare beneficiaries we spoke to also think the government made a mistake.

EVELYN SANG: If you had to pay a little more, what the heck, you know.

HARRY DENNEHY: I don't know why that wasn't one of the options that was offered. It really should have been.

EVELYN SANG: I can't see why they didn't do that.

HARRY DENNEHY: It really should have been - I mean, somebody at that level should have said, well, look, pass some of the increase on to the people who are paying the premiums.

EVLYN SANG: Who are paying the premiums.

SUSAN DENTZER: HCFA administrator DeParle disagrees. Allowing some HMOs to revise their rates, she says, would have opened the door to identical requests from all the health plans covering six and a half million Medicare beneficiaries in managed care.

NANCY ANN DE PARLE: I'm saying that I don't see that it's in our beneficiaries' best interests or the Medicare program's best interests to allow them to come in at this late date and increase the premiums and lower the benefits, and change this program around for beneficiaries who have relied on it.

SUSAN DENTZER: More than 90 plans in 30 states have now abandoned or scaled back their Medicare business for next year. As a result, some of the roughly 1/2 million affected beneficiaries will have to switch to new health plans -- and will probably have to change to new doctors as well. Donald Fisher heads an association representing large physician groups like the famed Mayo Clinic.

DONALD FISHER, American Medical Group Association: Our biggest concern in this whole thing is that it's going to totally disrupt these patient-physician relationships that have been developing over many, many years in very favorable relationships, and that's not good for healthcare.

SUSAN DENTZER: Meanwhile, an estimated 50,000 beneficiaries live in counties where no other managed care plans accept Medicare enrollees. They'll have no choice but to reenroll in conventionalMedicare. But that means that they may have to purchase costly Medigap insurance plans. The choices are dizzying.

NANCY KRODEL: There is Plan F that takes care of the Part B deductible, Plan C and Plan J. I will tell you the most common plans in Connecticut are plans C or Plan F, which are the better of the supplemental plans. So just in this little time you just had Medicare 101 right here at this little table.

SUSAN DENTZER: President Clinton recently called on HCFA to help beneficiaries sort through all of these options. HCFA has followed up with its own stern warning to insurers, reminding them of their legal obligations to sell Medigap policies to enrollees. The president also asked HCFA to take further steps to halt the erosion in Medicare+Choice -- a goal that everyone from health plans to providers enthusiastically supports. Moreover, the program now seems certain to undergo renewed congressional scrutiny next year. Although many in Congress once hoped to encourage almost half of the program's enrollees to join HMOs over the next decade, that now seems unlikely. To keep enrollments in HMOs growing even modestly, many say payments to HMO's will have to go up.

SEN. CHRISTOPHER DODD: I mean, obviously, we need to go back and you want to reexamine the reimbursement rates. You need to come back and find some middle ground in all of this, and that's why I'm not objecting at all to renegotiating, relooking at these contracts.

HARRY DENNEHY: It seems like we have all the facts but we don't have solutions.

OLDER LADY: Exactly. That is a very nice way of putting it.

SUSAN DENTZER: The big solution that continues to elude Congress is how to contain the costs of Medicare. If HMO payments are raised, the program may bust the tight budget that Congress set for it last year. And that's a lesson of Medicare+Choice that is hardly lost on Harry Dennehy and his fellow senior citizens in Connecticut: No matter how health care is delivered, it is going to be very difficult to control health care costs for America's aging population% ? FOCUS - TIME OUT

JIM LEHRER: Now, the pro-basketball story and to Elizabeth Farnsworth in San Francisco.

ELIZABETH FARNSWORTH: This was supposed to be professional basketball's opening day, but the lights won't come on in the big arenas tonight. Players have been locked out since June 30th, following three months of failed negotiations. The dispute began when owners voided the 1995 collective bargaining agreement, saying players' salaries as a percentage of team revenues had risen above the numbers both sides accepted three years ago. Players are banned from league facilities during a lockout and are not paid. Here for an update and some analysis are David Aldridge, who covers the NBA, and the negotiations for ESPN, the cable sports network, and Professor Roger Noll, a sports economist from Stanford University.David Aldridge, there may be mass depression among basketball fans tonight. What happened? Is money the main issue?

DAVID ALDRIDGE, ESPN: Money is always the main issue, and it is in this case. You know, you're talking about an industry with a television contract that NBC and Turner Broadcasting gave to the league - was $2.6 billion. You're talking about a league that makes more than $3 billion a year in licensing, sales of the products that they have, the T-shirts, the caps, the videos, and things like that. And what's happening here is that owners think that the salaries are increasing too dramatically and too high. Over the last few years you've had a number, a significant change in the number of people who get paid more than $10 million a year. You have several players who make more than $100 million over the life of their contrast. And the owners are saying that that's just too much money that they're paying out. Players, conversely, are saying it's not our fault that you're paying us this much money, you decide on the number, we're just agreeing to it, and we're not going to go back to the days where we didn't make more than 50 percent of all the money that you made.

ELIZABETH FARNSWORTH: Roger Noll, isn't this the first time that there's been an owner lockout in professional sports?

ROGER NOLL, Stanford University: Yes. This is the first time for a lockout, but, of course, it's not the first time for a loss of a season owing to a collective bargaining dispute.

ELIZABETH FARNSWORTH: The lockout's a pretty serious measure, so the owners must be taking this - this is something they really want changed.

ROGER NOLL: Well, I don't think that the intensity of the owners' feelings about this are really any different than in the past collective bargaining disputes. I agree. The issue is there's a hundred and fifty to two hundred million dollars per year on the table, whether players are going to get it, or owners are going to get it, and that's a lot of money. And they're going to fight intensively over that, no matter who starts it.

ELIZABETH FARNSWORTH: Roger Noll, what do you say to people out there who may be saying this is a lot of older men, the owners, rich men, and a lot of younger men, the players haggling over millions and millions of dollars, a pox on both their houses, we don't want to hear about it, we don't care, why should people care?

ROGER NOLL: And, in fact, I think that they really shouldn't care very much in the sense that this sport generates an enormous amount of money. Twelve players - a few coaches - a few front office officials. Twenty-five or so full-time equivalent people can generate 60, 70 million dollars per team. That's plenty of money to go around for all of them. And so I don't think from an ordinary sports fan's point of view, there's really much at stake in this, other than losing the games, and I think that sports fans are going to be angry. They won't be angry from losing the first few weeks of the season. But if this causes something like in baseball a few years ago to lose the championship playoffs and all the rest, then I think fans are going to be very angry from having lost a sport.

ELIZABETH FARNSWORTH: Do you agree with that, David Aldridge? And tell us at the same time how much of the season is lost as of right now?

DAVID ALDRIDGE: Well, I agree that there's going to be significant damage done to basketball because basketball is not like baseball. Baseball was a sport that had a hundred years of goodwill built up with the American public. It was the American pastime for seventy-five or eighty years, and it was a generational sport. Basketball only recently has enjoyed a lot of popularity amongst the masses in the United States. It's going to be difficult to get a lot of people back. They've already lost the first month of the season. All of November has already been canceled, so you're talking about 14 games out of each team's schedule, instead of an 82-game schedule we're down now to at most a 68-game schedule.

ELIZABETH FARNSWORTH: Roger Noll, what are the losses so far for the players?

ROGER NOLL: Well, the players are the big losers because of the arbitration decision a couple of weeks ago that said that they - the players who had long-term contracts do not have to be paid as long as the walkout is going on. By contrast, the owners continue to receive some of their broadcasting money. So right now the players are the ones facing huge losses. If they lose an entire season, of course, they would lose a billion dollars in salaries. But if they - even as a day goes by, they lose several million dollars a day per team.

ELIZABETH FARNSWORTH: And how about the owners? You said that they may not be losing too much, but what are they losing?

ROGER NOLL: Interestingly, all professional sports have the strange phenomenon that almost all the profitability of the sport occurs at the end of the season, when interest is high and who's going to make the playoffs and in the playoffs, themselves. So from the standpoint of an owner, losing the first two weeks of the season is nowhere as big a loss as it is for a player, who is paid proportionately over the whole season. Remember, the baseball strike was at the end of the season, when the baseball players had already received most of their salaries, but the owners were the ones who lost the month of September plus the World Series and all the championship playoffs. So the baseball case did much more damage to the owners. In the basketball case there's much more damage to the players to have it begin at the beginning of the season.

ELIZABETH FARNSWORTH: David Aldridge, how did this happen? The NBA had had a pretty good record for labor stability.

DAVID ALDRIDGE: Well, they had over the last several negotiations, they had been able to figure out a way to get a collective bargaining agreement done. They did have brief lockouts in 1995 and '96, but they only lasted a couple of days, before they could come up with a framework that made sense for both sides. And what's happened here, I think, is that owners really have just said we're not going to pay anymore than we're already paying; in fact, we want to pay a lot less. The last collective bargaining agreement, as you may recall, was blown up because the players didn't like it, so they came to an agreement that they would have this new agreement, but if the salaries went above a certain amount, the owners would have the option to terminate the agreement. And that's what happened here. And everybody has known for the last year and a half in the basketball community that this was going to happen, because the owners simply were not going to keep paying exponential increases in player's salaries, as they have been the last five or six years.

ELIZABETH FARNSWORTH: So, Roger Noll, do you think there's a way to resolve this? Is there any kind of an agreement that they've come to or come close to that may be resolving this? That was announced last week, and then apparently it fell through?

ROGER NOLL: Well, I'd just like to follow on with what David said. They're going to have to - the owners are going to have to realize that they are going to have to pay exponentially-increasing salaries, because the revenues are growing exponentially. The costs of putting on an NBA game grow at the rate of inflation; they grow 2 and 3 percent a year, except for the players' salaries. The revenues of the NBA are growing in the range of 15 percent per year. So it's completely logical that players are going to not only have their salaries grow exponentially but grow as a fraction of revenues. That happens - it's happened in all professional sports throughout the post war era. I think that it's really not so much that they can't afford to pay it. We know that from the sale of the Jets just a few days ago for $150 million, which is a relatively - the Nets rather - relatively weak team, that the owners are not poverty cases any more than the players are. I think that there is a basis for agreement but first we have to go through a period when both sides prove to the other that they are going to stick together, that the differences among owners and the differences among players are not going to cause either side to fold. As long as both sides come to realize that the other side is serious, then I think we'll get an agreement.

ELIZABETH FARNSWORTH: And David Aldridge, just very briefly, is there a chance that there might not be an agreement and the whole season could be canceled?

DAVID ALDRIDGE: Well, there's a chance, but I realistically think that they will get an agreement done. It's going to be very difficult for David Stern to acknowledge that an entire season was lost on his watch. Keep in mind, NBC has put a lot of money into the NBA, as well as TNT. It's going to be very difficult to tell the advertisers and the people that advertising those games that they're not going to get their money's worth. And the players -- bottom line -- do not want to miss a whole season.

ELIZABETH FARNSWORTH: Thank you both very much.DIALOGUE

JIM LEHRER: Finally tonight, a Gergen dialogue. David Gergen, editor-at-large of "U.S. News & World Report," engages Juan Williams, author of "Thurgood Marshall, American Revolutionary."

DAVID GERGEN: Juan, most people think of Thurgood Marshall as staid, reclusive, in a courtroom, far from the streets. Yet, you call him an American revolutionary. Why?

JUAN WILLIAMS, Author, "Thurgood Marshall:" David, I think there's no question that if you look over the course of this century, this is someone who achieved a revolution. Think of it for a second. He's born in 1908. He's born under the law as Plessy V. Ferguson, which means separate but equal. And we know the reality was separate but unequal. By the middle of the century Marshall, through his legal work and through the strategy that he's pursued and his just share will and determination, he has turned that on its head, created a revolution that had the Supreme Court rule unanimously in Brown versus Board of Education that segregation is illegal, unconstitutional, and that the citizens of this republic are not to be treated according to the color of their skin but that everyone is to be granted equality in the eyes of the law. That was a revolution. And it doesn't stop there. It then goes on because, remember, he goes on to join the court in '67, and he begins an expansive reading of the Constitution that allows for affirmative action, saying that the Constitution that really allowed for discrimination against people on the basis of color must also be a Constitution that allows for some remedy, some remedial effort. And that remedial effort, he decides, is going to be affirmative action, bussing, setasides, preferences in admission, that helps to create the black middle class in this society. That's a revolution.

DAVID GERGEN: What gave him his drive, his passion as a man between that time he was born in Baltimore? Was it the growing up in Baltimore: Was it going to the NAACP? What was it?

JUAN WILLIAMS: You know, what's fascinating for me as the biographer here is to understand the impact that place had on this individual. Sometimes when I meet people and come to know them, I forget place really helps to cast who they are from the very - you know, from the day they're born. And in Marshall's case, the fact that he comes from Baltimore, Maryland, is essential to understanding what gives him the vision and the drive. He has a sense, I think, that the world should be like Baltimore, as Baltimore was for him as a child. And what it was, was it a port city, where there were lots of immigrants, immigrants from Russia, Germany, Ireland, coming and living in Old West Baltimore. In the black area, he grows up next to a Jewish family, best friend is a Jewish kid, and he has a sense also that black people have some political voice, that they can speak out if there's anything being done incorrectly. He has a sense of black people having the capacity to run their own businesses, lead their own religious institutions, have their own newspapers. He sees this as the way the world is. If he'd been farther South, he would have been too much under the thumb of very much intense oppression in terms of the aftermath of slavery and reconstruction and harsh Jim Crowe. And if he'd been up North, of course, then he would have been experiencing the kind of alienation that comes from being one family among many terms of the small number of black people.

DAVID GERGEN: The way you described his life, it always seemed that when he went as a young man to work for the NAACP, that that gave him - just turned him around on the legal questions, and he became - okay, I'm going to change things through the law.

JUAN WILLIAMS: Well, one of the interesting things I think in everyone's life is kind of fighting our inner demons and coming to understand our own capacities, and in doing this book, one of the things that really fascinated me was seeing Marshall grow, seeing him flower, mature intellectually. He doesn't have much of a racial consciousness coming out of Baltimore, because it was a cocoon, it was a comfortable place, and he did feel that he was able to speak out and to be himself in Baltimore. But he didn't have a sense of what was going on in the wider United States. So as he goes off to college, he runs into none other than Langston Hughes, the poet and writer. And Hughes is one of the people that says, hey, Thurgood Marshall, stop using your voice to talk about fraternity parties and football games. What about what's going on in the country? And Marshall's like, hey, man, get out of my face. But by the time he gets to law school, he started to settle down, and then he comes in the grips of Charles Hamilton Houston, who was a Harvard-educated man, a black lawyer, who was trying to turn around Howard University's law school, and basically what Houston says if a lawyer is not a social architect, then he's a social parasite, and you, Thurgood Marshall, and you other men that I'm training here, I want you to be social revolutionaries. What Houston had done was to find that there are only about a thousand black lawyers in the United States in the late '20s, only a hundred of them working in the South, where most black people lived, and he believed that if we could get black lawyers to really get a grip of that law and use the law to protect rights, it could create a revolution. Marshall is the man who goes on to lead that revolution.

DAVID GERGEN: The legal scholar, Walter Dellinger, calls the Brown V. Board of Education case "the most important legal, political, social, and moral event in 20th century American domestic history." That was a case, of course, that Thurgood Marshall won at the Supreme Court level. How did he do it?

JUAN WILLIAMS: Marshall initially is reluctant to confront the court with the idea that segregation, per se, is unconstitutional. He has been slowly building, case by case, the idea that separate but equal doesn't work, by going out to the states and saying, okay, if you want to have separate but equal, you must have equal facilities for black folks, and finally reaching the point in Texas, where he says at the University of Texas Law School, hey, you can't build a law school that's going to be equal to the University of Texas Law School because a new black sort of jury-rigged law school is not going to have the traditions, it's not going to have the alumnae network, it's not going to have the funding that the University of Texas Law School has in the history of Texas. You can't beat it. And once he gets to that point and wins that victory from the court, then the question becomes: Are you willing to confront segregation as being unconstitutional, just saying to the court, this whole structure of Plessy V. Ferguson of separate but equal doesn't work. He finally makes that great leap in the 1950s when he takes that case, when he gets the five cases that make up Brown Versus Board of Education and takes them to the Supreme Court for that, really, as Dellinger says, a landmark victory that's not only the historians and the lawyers who say this, but you ask the psychologists, you ask the sociologists. That is the moment they say that transformed America in this century.

DAVID GERGEN: How did he feel toward the end of his life, when he - went to the court in the late '60s two thirds of black children went to predominantly integrated schools, a great goal for him. When he died two thirds of black children were going to mostly segregated schools. How did he feel about that?

JUAN WILLIAMS: I think it was part of the reason that towards the end you see someone who feels depressed, saddened, unappreciated, as if he's been forgotten. Marshall really stands a great integrationist. It's a little bit out of step with our times here at the end of the century when you hear so much talk about racial pride and nationalism and why does a black child have to sit next to a white child in order to get a good education. Marshall believed that there was a real reason for that, and the reason was that if you have the black child there next to that white child, then the black child is going to be protected because the dominant political structure being white-run is going to look out for the education and future of that white child, and if the black child is there, it's going to look out for that black child as well. But Marshall, rightly saw, he was no fool, that by the end of his life there was a higher rate of segregation in America's public schools than there had been at the time that he did Brown in '54. And he understood that part of the reason for this was demographics, the shift of white people from the big cities out to the suburbs, and the refusal of the court in the '70s to approve laws that would have allowed for cross-jurisdictional bussing, bringing kids from the suburbs into the cities and cities out to the suburbs. So he felt in so many ways that really the tide had shifted. What he couldn't have anticipated was, for example, the growth in the number of Hispanics in the country so that Hispanics are now "the" most segregated group of children in any schools in the United States, more so than black children. And, of course, when you have concentrated black and Hispanic kids, then you get those high, high rates of segregation. So he couldn't have anticipated it, and I think for him it was a sadness, a sadness attached to it, because he felt clearly the vision of the future should be more like Baltimore as a child, should have been one of integration.

DAVID GERGEN: You placed Thurgood Marshall in your book in a triumvirate of black Americans who were so important in the civil rights era.

JUAN WILLIAMS: Right.

DAVID GERGEN: Thurgood Marshall, Martin Luther King, and Malcolm X. How does his legacy stack up against the other two?

JUAN WILLIAMS: Well, let me answer this question, David, through his eyes. Through his eyes Martin Luther King was a great orator, certainly was a media symbol in terms of the civil rights revolution. But he didn't - in Marshall's mind - change the laws - change the landscape, that you could listen to a Martin Luther King, Jr. speech on the mall in 1963 at the Great March in Washington, be absolutely overcome, but yet go back to an America that was practicing segregation. You could deal with a Malcolm X, a man who was standing there as a defiant, angry voice for all the unfairness that had been visited on black people in the history of this country, and yet, Marshall would say, well, what did Malcolm X ever accomplish? He didn't even lead the marches that Martin Luther King did, and he certainly wasn't changing laws or lobbying Congress or even the mayor's office in New York for changes in the society. He was advocating having black people be separate. That was not something that was going to change and improve the condition of black folks. He said the only other group he knew that wanted people to be separate like that with the KKK. So, in his mind, these folks don't stand up to a Marshall who changed America, literally changed the law, changed the way we relate as citizens, and change the future for children in future generations. So Marshall saw himself as standing above those folks, and that, of course, created problems for him, because a lot of the young people who were the activists, always saw him as somewhat bourgeois, elitist, standoffish, that he really wasn't of a spirit to get out in the street.

DAVID GERGEN: Juan Williams, thank you very much.

JUAN WILLIAMS: Thank you.% ? RECAP

JIM LEHRER: The major story of this election day is about to begin as the votes are counted. The polls closed early an hour ago in Kentucky and Indiana. The Associated Press projected former Indiana Governor Evan Bayh, a Democrat, the winner of the US Senate seat held by Republican Dan Coats, who did not seek re-election. In Kentucky, two congressmen, Republican Jim Bunning and Democrat Scotty Baesler were in a tight race to succeed retiring Democratic Senator Wendell Ford. We'll see you online and again here tomorrow evening with full coverage and analysis of today's election returns. I'm Jim Lehrer. Thank you and good night.