The MacNeil/Lehrer NewsHour

INTRO

JIM LEHRER: Good evening. The news of this day was dominated by events and talk about Medicare and other issues of concern to the elderly. Both President Reagan and Walter Mondale had special political words on the subject. Also today, Hurricane Diana still blows across the coast of North Carolina although at a reducing velocity. It hit full force last night, causing millions of dollars of damage to several beach areas. And in Israel, there were finally no more last-minute hitches, and a new power-sharing government of national unity came into being. Robert MacNeil is way tonight; Charlayne Hunter-Gault is in New York. Charlayne?

CHARLAYNE HUNTER-GAULT: The menu of our NewsHour tonight begins with that hot political potato and the major issue we debate tonight, the elderly and their health costs. With one of the most ardent champions of the nation's elderly on one side and one of the architects of the Reagan administration's Medicare reforms on the other, we look at just how fair the current administration has been to the elderly. We follow that with two other opposing views of what it will take to save the Medicare system, who will pay and who will get hurt.We'll also focus on a growing concern about toxic wastes, the big business of who cleans it up.

LEHRER: Two elderly men of American politics, President Reagan and House Speaker Thomas O'Neill, played a round of elderly politics today, exchanging barbs over cutting Social Security benefits. It was fitting and no accident it happened today, declared Senior Health Action Day by various senior citizen activist groups to call attention to the final problems of Medicare, the health insurance program for the elderly. Yesterday Speaker O'Neill had said Social Security had always been one of President Reagan's key budget-cutting targets. Today Mr. Reagan on his way to Tennessee responded.

Pres. RONALD REAGAN: He was a part of the bipartisan commission that came forth with the plan to put Social Security on a sound fiscal basis. It's been adopted. Social Security is secure as far as we can see into the next century and we're not going to touch the benefits of the people on Social Security.

LEHRER: Speaker O'Neill countered with another statement, saying congressmen who want pure Reaganism should introduce legislation that would cut both Social Security and Medicare. Meanwhile, Mr. Reagan's real opponent for president, Walter Mondale, was campaigning in the South, and he too spoke of Medicare before a group in Tupelo, Mississippi.

WALTER MONDALE, Democratic presidential candidate: He wanted to cut $30 billion out of Medicare. He wanted senior citizens to pay up to $1,500 for a hospital stay. He wanted the seniors to pay more to doctors. He wouldn't freeze doctors' bills. He wanted to weaken Medicare until millions of Americans were excluded from the program. And he was out to almost destroy the Medicare program entirely. Now, my fellow Americans, what kind of people are we? Do we want to do that to our senior citizens?Of all the mean-spirited ways, of all the shameful ways to cut money out of that budget, is to go to a senior citizen who's retired and who's now sick and in a hospital and say, "We figured out a way to save money. We're going to raise your hospital and your medical bills while you're on that hospital bed sick." I will not do it. I will stand behind that program.

LEHRER: The importance of the elderly vote to Mondale can be seen in a new Washington Post/ABC poll. President Reagan has a staggering 16-point lead over Mondale overall, but the lead is a less staggering five points among voters 61 years old or older. Charlayne?

HUNTER-GAULT: As part of Senior Health Action Day throughout the country, thousands of the elderly gathered for marches, speeches, public hearings and voter registration drives. Their message: stop cuts in Medicare. In Washington, senior citizens descended upon the Reagan-Bush headquarters, demanding to know Reagan's plans for Medicare. But they were not allowed past the front lobby. Afterwards, several of the demonstrators expressed their frustrations to NewsHour reporter Jeff Goldman.

ANABEL SEIDMAN: And Mr. Reagan has given us no answer. If we rely on his past record, that's pretty bad. We don't have anything to hope for from him except cuts, cuts and more cuts.

IRVING PARKER: He don't pay any attention to people going to the grocery, people paying Medicare and things you have to pay. He's a fine President for the rich people.

MARCILLUS ROBERSON: Mr. Mondale in essence is responding to the need of the seniors by making known what his plans are.Mr. Reagan is silent in most cases.

GLADYS KASTANEK: I think the Republican candidates are being very honest about it.

JEFF GOLDMAN: How so?

Ms. KASTANEK: They're not trying to make it, you know, better than it really is, or to, you know, to be phonies and make it sound better. They're honest about it, which is the way they should be.

HUNTER-GAULT: Questions were addressed to both of the candidates for president by the National Council of Senior Citizens. The group said today that on August 27th it asked each one what he would do to improve Medicare if he is elected. The group said former Vice President Mondale replied to its satisfaction within a few days. He endorsed a plan to contain medical costs and to prevent doctors from charging more than the amount that Medicare pays for their services. The group said President Reagan has not yet replied. Jim? Issue and Debate: The Elderly

LEHRER: That brings us to our special issue-and-debate segment on Medicare and the 1984 politics of the elderly. The players in round one are Congressman Claude Pepper, Democrat of Florida, a member of the House Select Committee on Aging and a long-time advocate and spokesman on Health and other senior issues; and on the other side, Dr. Robert Rubin, until recently the assistant secretary of Health and Human Services in the Reagan administration, where he was a principal architect of administration Medicare policy.He's now an associate professor of medicine at Georgetown University, but he's with us tonight from the studios of public station WTPW in Chicago.

First, Congressman Pepper, how would you assess President Reagan's record on issues of concern to the elderly?

Rep. CLAUDE PEPPER: He's been the worst enemy the elderly people have ever had in the White House. Worst enemy they've ever had in public life. He promised -- and I was there when he promised it in Philadelphia in 1980 -- that he would support strongly Social Security. He promised that every federal commitment would be faithfully kept. He promised on the first day of February when he addressed a joint session of Congress, 1981, Medicare will not be cut. Shortly thereafter he asked Congress to cut $88 billion in the next five years off of Social Security benefits, and he cut 19 before we could stop it, $19 billion for the next five years. He's touched billions in Social Security every year since he's been in the White House. He came along here on the 28th of March in an interview with The New York Times, and he said Social Security had to be revamped, and a week later his secretary of the Treasury said that it had to be made into a welfare program. And a little while later the President said, "You ain't seen nothing yet," when we understood he was talking about the cuts that are going to be made in social programs to try to meet the terrible budget deficit that he's piled up. So the President, instead of making progress on what Roosevelt started and all other presidents, Democrat and Republican, have included increases for -- he's the first man to reverse the process of improving the social programs. And this election is going to determine what kind of Social Security, if any, we've got after this election; what kind of Medicare we'll have, if any; what social programs will be available to the elderly.

LEHRER: Dr. Rubin, that's a stark accusation. What is your response?

Dr. ROBERT RUBIN: Well, I think if we look at the facts rather than some of the rhetoric we might be able to have a better response. For example, a larger part of the federal budget is going towards programs for the elderly than at any other time in this country's history. Medicare has not been cut; the Medicare budget has gone up every year under this administration. Indeed, Social Security benefits have gone up, and indeed, Social Security was put on a sound financial footing, as the President showed in your newsclip, as a result of the bipartisan commission. The problem in Social Security was clearly one of political will, and I think the President showed great leadership in forming a bipartisan commission to be able to put this behind us. And at the time that Congress passed the legislation implementing the recommendations of the bipartisan commission, it also passed probably the greatest reform in the history of Medicare, the prospective payment system. By the way, I should point out that that was a reform that did cut billions of dollars out of the Medicare budget, billions that I think this administration is proud to have cut out because it cut out inefficiency and waste, and has been endorsed by the American Association of Retired Persons and numerous other elderly groups as a step in the right direction. So I think this President and this administration have a good record as regards the elderly. They certainly have not given them all that the elderly wants, but I think that they certainly have provided elderly citizens with what is reasonable in terms of government benefits.

LEHRER: Congressman?

Rep. PEPPER: Well, I can say that the President approved a budget proposal of the Senate Budget Committee last year or year before cutting $40 billion off of Social Security.

LEHRER: Now, let's ask Dr. Rubin. Is that true, Dr. Rubin?

Dr. RUBIN: I don't believe the numbers are quite right, but I wouldn't argue with Mr. Pepper on where he's about to go. I would point out that most of the changes that were approved by the bipartisan commission were indeed embodied in the ill-fated May 1981 recommendation that the President sent to the Congress. So I think that it was really an issue of political will rather than the specifics that resulted in the bipartisan approach towards solving the Social Security problem.

Rep. PEPPER: Talking about cutting Medicare, the Social Security Advisory Commission a little while ago said, speaking for the administration, I presume, that they way --

Dr. RUBIN: No, that's not correct.

Rep. PEPPER: -- to save Medicare was to add to the cost of the Medicare patient over the $356 they have to pay now to go to a hospital, and raise the age of eligibility from 65 to 67. And the doctor knows that that recommendation was made by the Social Security Advisory Commission. That's the administration approach. I was on that Social Security Commission and I know that up until the last week, the Reagan administration held to the position they would not allow the use of general revenue, they would not allow new taxes; there wasn't anything else to do but cut benefits. We five Democrats wouldn't let them do it.

LEHRER: Dr. Rubin?

Dr. RUBIN: Well, Mr. Pepper is confusing two groups. The Advisory Commission on Social Security was appointed by then-Secretary Schweiker to advise both he and the Congress as to the long-term future of Medicare. And they made a number of recommendations which the administration neither endorsed nor rejected. He was on the bipartisan commission as well, and I believe that that's where the issue of increasing -- both groups spoke to the issue of increasing eligibility. So that I think that --

LEHRER: You think it's just not fair to blame President Reagan for that, is that what you're saying?

Dr. RUBIN: Certainly. The Advisory Commission on Social Security was not a presidential commission and certainly it does not speak for the administration. I don't believe that the administration would endorse all of their recommendations, nor do I believe they would reject all of their recommendations.

LEHRER: Well, Congressman Pepper, there's no issue about the fact that Medicare is in serious financial trouble.

Rep. PEPPER: That's right.

LEHRER: In a nutshell, what is your solution to that problem?

Rep. PEPPER: My solution is that we resort to proven private enterprise through preferred providers and health maintenance organizations, and to enacting a bill that I have pending in the Congress to authorize hospitals to become HMOs.I know now that the insurance companies in health matters are beginning to use the HMO. If we can have HMOs all over America, some of them by private enterprise, some by doctors, some by hospitals, some by insurance companies and others, all of them competing for the quality of business that they get and for the quality of medical care that they give, and competing in low-cost giving of that service, we'll have a good medical system for the elderly. Then let the elderly on a prepayment basis pay whatever they can. Then we'll determine what the government has to pay beyond. And in that way we can keep costs down, which is the only effective way and the fair way to do it. If we keep costs down, then we can improve the quality of medical care.

LEHRER: Dr. Rubin? What do you think of that idea?

Dr. RUBIN: I agree completely with Mr. Pepper. I would point out that indeed the administration supported exactly such an approach, and about six months ago the secretary of Health and Human Services, Margaret Heckler, signed regulations which would allow Medicare beneficiaries for the first time to belong to health maintenance organizations. This administration has supported that extension of Medicare since the first day that it was in office, and indeed supported that provision in the Congress and fought very hard for it. So that I clearly agree that the private sector is the way to go in order to control health care costs, and I think that the more Medicare beneficiaries we have in health maintenance organizations and other competitive health organizations that are designed to decrease utilization and improve the quality of health care, the better off all our citizens are going to be.

LEHRER: Dr. Rubin, let me ask you this. Congressman Pepper and others on the Domocratic side have suggested that President Reagan really has in mind, though to cut Medicare benefits when it comes right down to it. Based on your knowledge of the President's intention, the administration's intention, is that so or not so?

Dr. RUBIN: I don't have any knowledge of any short-term approach that would cut benefits. I'd point out that the Congressional Budget Office in a study released about a year ago said that in order to solve the Medicare crisis, revenues would have to be increased by about 43% or benefits decreased by 30%. I think what we really need to do is to cut down in waste and inefficiency, provide the proper incentives, as Mr. Pepper has suggested, through the use of health maintenance organizations, through prospective payment, extending prospective payment to other kinds of providers, such as nursing homes, etcetera. And by that we can help to solve a part of the crisis.

Rep. PEPPER: Mr. Lehrer, in contrast to what Dr. Rubin says, the President has not asserted so far. President -- I mean Walter Mondale was co author of the legislation setting up Medicare. He has unequivocally said, "I'm going to keep it not only sound, but we're not going to cut benefits. We're not going to cut down the quality of service or the amount of service being given to the elderly." So all I can say as a friend of the elderly: if you want a clear choice, compare the record of Mr. Mondale with the record of the President, and you want to be sure about your Social Security and your Medicare, you'll vote for Mondale and Ferraro, who's a member of my -- or aging commission -- aging committee.

LEHRER: Congressman Pepper, Dr. Rubin, thank you both very much and don't go away, 'cause we'll be back to you in a few minutes. Charlayne?

HUNTER-GAULT: The Medicare system has been troublesome for politicians almost since its inception in 1965. Even in its early years, expenditures soared far beyond expectations, and by 1975 there was fear of bankruptcy. This fiscal year, Medicare has paid about $44 billion to hospitals, nursing homes and home health care agencies. According to the Congressional Budget Office that figure will more than triple by 1995 to $150 billion, bringing the Medicare budget deficit to a whopping $100 billion. Impatient with the administration's approach to reducing the deficit, the Democrats this year jumped in with their own plans, the most talked-about one being designed by Congressman Richard Gephardt and Senator Edward Kennedy. It has become a part of the Mondale platform. What it does is place limits on reimbursements, not just to hospitals but to doctors as well. Even more dramatic, the limits would apply to the treatment of all patients, not just those on Medicare. At a hearing on Capitol Hill today, Senator Kennedy was joined by senior citizens in calling for immediate action to save Medicare.

Sen. EDWARD KENNEDY, (D) Massachusetts: You can't get away from the fact that this Medicare trust fund is in deep crisis. And the American people are entitled to know before the election what those who have some responsibility for this system are going to do after the election. And I have been enormously troubled by the fact that the responsible officials within the administration have refused to come up with a solution or recommendation. What we can only assume is that they'll follow the path of the past, which is clearly a reduction in coverage and an increase in premiums. And if that is not their position, they ought to be forthcoming in telling us what it is.

WILLIAM HUTTON, National Council of Senior Citizens: Senior citizens of this nation are far more aware of the crisis in health care costs and Medicare than most other people. The elderly experience these problems first hand and live with them every day. Senior citizens are the ones who must stretch their limited incomes to pay for prescription drugs. They're the ones who know how hospital inflation reaches deeply into their pockets through the $356 part A deductible. Seniors live in fear that not only is their health threatened with advancing age, but now their Medicare protection is threatened by Congress' failure to enact needed reform. Somebody's got to start somewhere and now is almost already too late.

HUNTER-GAULT: Now here to explain exactly why time is running out on Medicare as well as to give his views on what can be done about it is a man who is no stranger to saving endangered systems. Robert Myers was an architect of President Reagan's Social Security reform plan when he served as executive director of the National Commission on Social Security Reform in 1983. Mr. Myers is now a private consultant.

Mr. Myers, why exactly is time running out on Medicare?

ROBERT MYERS: The reason that time is running out is that if nothing were done, the Medicare trust fund would stay level -- the hospital insurance trust fund would stay level for a few years, and then eventually it would decline until by 1990 or 1991 it would run out of money, and any annual deficits of outgo over income would just get larger and larger.

HUNTER-GAULT: All right. Now, you mentioned the trust fund. Just explain exactly how the thing is funded and where the real problems are with -- because as I understand it, one of the funds isn't in trouble but another one is. So in the simplest terms, could you tell meabout that?

Mr. MYERS: Yes. Very simply, there are two Medicare trust funds, one that pays largely hospital benefits, the other pays for physician fees. The one that pays hospital benefits is financed from payroll taxes. There's a schedule in the law that says what those rates will be in the future. They'll increase slowly for a few years and then be level. The other fund, so-called Part B that pays physician fees, about 25% of the cost is met by premiums that the enrollees, that is, the aged people and the disabled beneficiaries, pay; the other 75% comes from general revenues.

HUNTER-GAULT: All right. Now, which one is in the biggest --

Mr. MYERS: The one that's in trouble over the long run is the hospital fund. The other one is not in trouble except that the costs are ever going up, that the premiums will be higher, and therefore the matching federal funds will be higher.

HUNTER-GAULT: Right. And the hospital fund is in trouble specifically because?

Mr. MYERS: The reason it's in trouble basically is that hospital costs have been rising much more rapidly than wages, and it's wages that -- increases in wages provide its increases in income, whereas the outgo depends on hospital costs that have been rising perhaps twice as rapidly as wages.

HUNTER-GAULT: How soon can you expect the real crisis to hit?

Mr. MYERS: If economic conditions are reasonably good, we have until about 1990 or 1991. If there should be some sort of an economic disturbance, we could have difficulties as early as 1988.

HUNTER-GAULT: Why is it so difficult to come up with a solution to this problem? I mean, Social Security was in equally bad trouble, wasn't it, and you've solved that one.

Mr. MYERS: Social Security was in pretty bad trouble and we solved that. It wasn't easy, as Congressman Pepper knows.Each side -- everybody had to give up something. But Medicare is even -- hospital insurance is even more difficult.

HUNTER-GAULT: Why is that?

Mr. MYERS: Because in the Social Security program the benefits are related to the wages on which the taxes are paid, whereas there's no connection between the hospital costs and the wages on which the taxes are paid. In other words, the hospital costs are going up much faster than the wages.

HUNTER-GAULT: And you can't control how man --

Mr. MYERS: And you can't -- the utilization of services can or cannot be controlled, whereas the cash benefits, you know more clearly how many people there are and what their average benefits will be.

HUNTER-GAULT: All right. As I understand it, basically both the Republicans and the Democrats are talking about solutions that are very similar. That is, trying to contain the costs. Now, what's wrong with that approach?

Mr. MYERS: There's nothing wrong with that approach insofar as it goes. But I am not at all convinced that cost containment will be all that successful. I hope it will be, and even if -- it should give a partial solution, but I don't think that cost containment alone is sufficient.

HUNTER-GAULT: Why not? I mean, so far, as I understand it, the Reagan administration efforts at cost containment have already resulted in some significant reductions and there are predictions that I guess by 1989 there'll be at least $7 billion in just the ones they've already implemented. I mean why, given time, wouldn't that approach work?

Mr. MYERS: That just won't, I think, produce enough revenues, and it's also too early to tell about controls. You can put controls on and be successful for a while, and then they erupt. And I'm not -- I hope it'll work; I think it'll be a help, but I don't think it'll be at all sufficient to solve the coming financing problem of the hospital insurance system.

HUNTER-GAULT: Well, what do you think would be sufficient?

Mr. MYERS: Well, I think that what has to be done is like the Social Security consensus. Everybody's going to have to give up a little bit. As far as the beneficiaries are concerned, I won't call it a benefit cut -- in a sense it might be. I think people ought to have to pay a little more. For example, now when a person goes to the hospital they pay $356, but then for 60 days they pay nothing. And there's nothing to discourage them from staying in the hospital an extra few days. If they had to pay a small amount each day, they might think twice about that extra day. Then on the medical, the Part B, the physician part, I think the $75 deductible should be gradually increased to reflect just the declining value of money. That's on the beneficiaries -- that's a thing that they would have to hurt a little.

HUNTER-GAULT: Right.

Mr. MYERS: Then I think the taxpayers might have to give up a bit more. There might have to be somewhat higher payroll taxes. Perhaps some of this will come because the Social Security taxes in the 1990s may well be too high.

HUNTER-GAULT: So in effect what you're saying is, your view is that there are going to have to be some adjustment downward of benefits and some increase in the taxes, just as you did with Social Security?

Mr. MYERS: Yes, I think so. After we've tried everything else, which is to try to get greater efficiency in the system and less expenditures for hospital costs and things like that. But I don't think that'd be enough.

HUNTER-GAULT: All right. We'll be back to you in a few minutes. Unlike Mr. Myers, there are those who don't think that any of the traditional solutions being discussed will solve the Medicare problem. Prominent among them is Dr. William Schwartz, a professor of medicine at Tufts University School of Medicine. Dr. Schwartz is coauthor of The Painful Prescription: Rationing Hospital Care, a recent book published by the Brookings Institution that compares cost-containment strategies in the United States and Britain. He joins us from public station WGBH in Boston.

Dr. Schwartz, first of all, I just said you don't think any of these strategies will work. Can you just tick off, based on what you've heard, why they won't?

Dr. WILLIAM SCHWARTZ: I think there's potential for very substantial savings by eliminating inefficiencies in the system, and I want to say with some considerable force that the move towards cutting back on useless hospital admissions and shortening length of stay -- those are very good moves and they promise to cut our present expenditures by perhaps 15 or 20 billion dollars.

HUNTER-GAULT: Those are the ones that the Reagan administration has instituted.

Dr. SCHWARTZ: The Reagan administration, that HMOs have already introduced, that preferred provider organizations are trying to introduce. The difficulty is, those are not the growth areas in hospital costs. We can cut all of those wasteful activities without doing anything significant to the 7% annual real rate of increase in hospital costs, which is what is chewing us up from a financial point of view.

HUNTER-GAULT: Where is that coming from?

Dr. SCHWARTZ: The 7% increase is coming basically from three factors. A little bit from an enlarging population and a larger fraction of older people. A little bit from the fact that hospitals' costs in terms of the prices of doing business are higher than the rest of the country because they're labor intensive. And mostly from the fact that we are seeing a revolution in health care due to the fruits of the research that's been going on in this country over the last 25 or 30 years. In a curious way, we are the victims of our own success. Just as in the last few years, coronary bypass grafts and hip replacements and CAT scanners have added tremendously to medical benefits, so they've added tremendously to costs. And the difficulty that we face, and it's really ironic, is that in this decade, with the new technique beyond CAT scanning, of what's called magnetic resonance imaging, with new treatments for cancer and for burns, with artificial hearts in the wing, with liver and lung and pancreas transplants and all sort of other technologies that I could describe, we are seeing new and expensive treatments coming on stream constantly. Now, if you look at HMOs, although they spend less than the rest of society, than the fee-for-service sector, interestingly enough, their rate of increase in costs is the same as in the rest of the fee-for-service sector. And that's hardly surprising. If HMOs hadn't been providing hip replacement and open-heart surgery and CAT scanners, they would have been denying benefits. So my basic concern is that anytime we talk about a new cost-containment technique, we must distinguish between the fact that it may simply be cutting what we're spending now, which is all to the good; but even if we cut 15 or 20 billion dollars off hospital costs today, within two or three years we'd be right up to where we are now because we're spending about $8 billion more in real terms each year, and a few more years after that, we would scarcely know that we had effected that initial one-time saving.

HUNTER-GAULT: Well, then what do you see happening? I mean, what's the answer?

Dr. SCHWARTZ: Well, the trouble is there is no magic answer. Certainly the first thing to do is to try to save that 15 or 20 billion dollars. That buys us time, and it's a lot of money.

HUNTER-GAULT: But how do you do that? I mean, the things that you've talked about are things that are extending people's lives and saving the lives of people who haven't had any hope in the past.

Dr. SCHWARTZ: No I'd like to make a very sharp distinction between those things we can get rid of which give up nothing medically, and there is a considerable amount of such activity -- unnecessary operations, useless hospital admissions, the extra day or two in the hospital. HMOs deal with that. The country as a whole can deal with that. We can save a lot of money. That's over here. On the other side we have this stream of new technology which will soon wipe out those savings. So I'm for the savings, but I'm suggesting that if we want to continue to provide all possible medical benefits to everyone who could be helped, that before very long we are going to have to make a very tough decision. One choice is to continue doing business just as we've had. Throughout my entire professional career the rule has been for physicians, if it helps, do it. Cost has not been our primary concern. Now, if we want to continue providing whatever benefits are available as this stream of wonderful new treatment technology comes on stream, then we have to stop complaining about rising costs. Once we get rid of these inefficiencies, we have to accept that cost will continue to rise.

HUNTER-GAULT: But don't you also have a concern about rationing? I mean there will come --

Dr. SCHWARTZ: Absolutely.

HUNTER-GAULT: Just briefly tell me what that is.

Dr. SCHWARTZ: The alternative is to accept rising costs once we've squeezed the inefficiencies and fat out of the system, and continue doing everything that we can do to be helpful. The other decision is to say we are spending too much money on this new technology and on health care, we can't afford it; we're going to get rid of some of the relatively less effective treatments that we're using, even though they're beneficial. We can take the position that that money can best be spent on the environment or some other socially useful purpose, and once we make that decision -- and that decision in my view is essential; certainly within three or four years we will have to face that decision --

HUNTER-GAULT: But that decision is going to affect --

Dr. SCHWARTZ: -- and that means rationing. That decision to give up medical benefits, to contain costs, is just a polite way of saying we have to decide on rationing and we have to decide that some people will not get all the medical care that could benefit them.

HUNTER-GAULT: And by that you mean the older people in the society?

Dr. SCHWARTZ: No, I don't think it has anything to do with older or younger.It has to do more specifically with older people to the extent that more older people are sick. But it could be a young person with a very serious disease in which it's extremely expensive to treat it and the prospects of helping that person are rather small. And we might decide that the hundred or two hundred thousand or three hundred thousand dollars that we would spend in order to help them a little bit is too much, that we might better spend it on someone else in the system who could benefit more, or that we might decide that we want to spend it on something else entirely that we view as socially useful.

HUNTER-GAULT: I see. All right, thank you. Jim?

LEHRER: Back to you, Congressman Pepper. First, what do you think? Do you think we're going to go to a system of rationing?

Rep. PEPPER: No. I bitterly oppose that. I'm not in favor of determining one shall live and another shall die because of the lack of money, to save one of them or both of them. What the doctor is talking about there can be taken care of by catastrophic insurance. Don't use a lot of techniques that are now being used that are no good. The administration has cut out a program that weeded out a lot of the techniques of treatment at the present time. Sometimes they were helpful and many times they were harmless -- didn't do any good at all. But what we can do if we can establish the HMO principle and let Medicare contract with the HMOs all over the country, you'll have them all in competition with one another, but don't deny anybody a proven new technique that would be a vital contribution to the saving of a life or the improvement of that person's health. It can be taken care of by catastrophic insurance.

LEHRER: Dr. Rubin, what is your view of that?

Dr. RUBIN: I basically agree with Dr. Schwartz. I think where I would differ with him is the projection of the timetable and --

LEHRER: He says three years; you don't think it will take that long?

Dr. RUBIN: No, I think it would take a lot longer than that.I think that there are a number of devices dealing with cost containment that have yet to reach their full maturity. I agree with Mr. Pepper that the HMO movement needs to grow and that that will further decrease hospital utilization and inappropriate utilization of health care. However, at some point in time this society needs to make a decision as to how much money it's willing to spend on health care and how much money it's willing to spend on other things. And I think the point that Dr. Schwartz was trying to bring out is, is it appropriate for we as a society to spend $250,000 for someone to get a liver transplant when we know that the success of that liver transplant may be only 25 or 30 percent? Is that an appropriate use of either public funds or private funds, when that same money could be utilized perhaps to screen 25,000 children for malnutrition or whatever? So I think that we are coming to a point where we are going to have to make choices, and unfortunately some of those choices may well be on a combination of cost as well as medical benefit. As a physician I think both Dr. Schwartz and I have seen many times when we have done procedures that have a very small probability of helping the patient but which is for the sake of completeness something that needed to be done, I think that those sorts of procedures are going to have to stop and we're going to have to think much more carefully as to what we're doing when we do take care of very sick patients.

LEHRER: Mr. Myers, what's your view of this?

Mr. MYERS: Well, I think I both agree and disagree with all three of the previous ones. On some points yes, on some points no. I think that what the country needs to do is really to get a better education as to what things are worth doing and what things aren't. But if the country really feels that it wants all the medical care that science can bring, it should then pay for it. And I'd like to see that brought out in the open.

LEHRER: But you think it's a legitimate question to be raised, and then ask the people to answer yes or no?

Mr. MYERS: Yes, and I think there should be some financial element in it so that people [don't] say, "Well, it doesn't cost anything. I'll have it done." And as for HMOs, I think they're a good idea. I was a member of an HMO for over 40 years. I think they have their good points, they also have their bad points. I don't think they're the panacea that many people that many people say, particularly people who have never been a member of an HMO and are such ardent supporters of them.

LEHRER: Dr. Schwartz, back to you. You heard what Dr. Rubin, Mr. Myers and Congressman Pepper have said about your idea. What do you think about -- realistically, what you're talking about -- well, how realistic is it? I mean, do you think the country is ever going to come to grips with that question that you raised?

Dr. SCHWARTZ: Well, I think we will come to grips with it, but not for a while, because there is a phenomenon already at play which will probably take the pressure off. If the underlying rate of increase in cost is running about 7% due to technology and other factors, but each year for the next couple of years we cut back on admissions to hospitals, we may offset some of that 7% and end up with a four or five percent growth rate, as was the case in the first quarter of this year. That's going to produce a transient euphoria. The illusion may take hold that we've solved our problem. But once we've used up those one-shot savings, we may find that we're right back, and probably will find we're right back on that rapid growth curve, and that poses a serious problem. Now, the difficulty with the technology is that technology is neither always very useful or no good at all. The dilemma is that much of the technology is a little bit useful. The first CAT scans that we do, and if we had one instrument, it would be people who had a suspected brain tumor or head injury where the chances of a big payoff medically are very, very high. The last thousand CAT scans we do at the same cost per scan will be on people and are on people who are dizzy, who have perhaps senile dementia, who have headaches without any neurologic abnormalities, and the yield on those is very low. Now, we can't say those are useless procedures. If you or I had one of those disorders, we'd want that CAT scan. The dilemma we face is giving up benefits of that sort.

LEHRER: And that's your point, Congressman, right?

Rep. PEPPER: Yeah. May I just say one thing, Jim? To me in a way it's a marvel that Medicare has survived as well as it has, as long as it has. If you turned the money that's involved in this program loose to be invaded by every doctor, every hospital provider, every hospital in the country any time they want to send a patient to the hospital, let him stay there up until recently as long as they want to, the hospitals do anything for them that they decide to do -- it's a wonder to me that it has survived as well as it has. But under the HMO system, each one of these would be looking at all these costs and trying to hold it down.

LEHRER: Okay. I hear you. And I hear you, Dr. Rubin, in Chicago -- thank you very much for being with us. Dr. Schwartz, in Boston, thank you, thanks to you. Congressman Pepper and Mr. Myers here, thank you. Charlayne?

HUNTER-GAULT: Wall Street did its best today to snap out of a three-week slump, closing sharply higher in active trading.The Dow Jones industrial average closed up 27.94 at 1228.25 with over 110 million shares changing hands. We'll have more ahead in the NewsHour tonight, including a documentary report on the growing problems of who cleans up toxic waste.

[Video postcard -- Sutton, Massachusetts]

HUNTER-GAULT: Hurricane warnings were discontinued this evening along the coast of North Carolina after the storm called Diana turned inland and began slowing down to a gale. It left behind damage estimated at upwards of $20 million in the region around Cape Fear, and for a time several hundred people were stranded in their homes on the low-lying offshore islands. The full force of the hurricane was felt in the areas close to the sea, where gusts of up to 115 miles an hour tore sheets of metal roofing off some of the buildings. In this area, one man died of a heart attack while he was trying to secure his house against the fury of the wind. Some of the heaviest damage was in Wilmington, North Carolina, which was the largest community hit by the storm. Power lines in several places were knocked down by flying debris and falling trees, and the power company said that electricity was cut off to as many as 30,000 homes in the area. Jim Hunt, the governor of North Carolina, said he would ask President Reagan to declare a major disaster area, which will make it easier for people to obtain loans to repair their homes. The National Weather Service says the main threat from Diana now is heavy rains and flooding along the inland rivers and creeks. On the coast, gale warnings remained in effect along about half the coast of North and South Carolina.

In Florida the federal government halted all shipment of citrus fruit because of an outbreak of citrus canker, a disease that destroys the trees. About a million trees are to be burned at one large citrus nursery, and experts have recommended that all growers be required to destroy all the plants they bought from the nursery this year. The ban on the shipments will remain in effect until further notice.

LEHRER: Overseas today, the Israeli political stalemate ended. The Israeli parliament is about to approve a national unity government headed by Labor leader Shimon Peres. Neither Labor nor the Likud Party of Prime Minister Yitzhak Shamir won a majority of seats in last July's elections and neither was able to put together a government. So today they agreed to form what Peres called a government of disagreement.

SHIMON PERES, Labor Party leader: We're beginning our new road, our joint way, with a conviction that we did a service to our people, that finally, Israel will be strengthened out of this agreement, and that jointly we can answer the calls of our people by far better.

LEHRER: And Iraq for the fourth straight day claimed its warplanes attachedk a ship in the Persian Gulf near Iran. This time the target was reportedly a tugboat. Three crewmen are missing and presumed dead. Charlayne? Big Business in Wastes

HUNTER-GAULT: The problem of how best to protect the public from environmental disasters caused by toxic waste disposal has long been a subject of debate. While that debate goes on, companies that specialize in getting rid of someone else's lethal garbage have been doing a booming business. But today The Wall Street Journal reported that a federal investigation into the nation's largest disposer of toxic wastes had revealed widespread violations in its waste disposal practices. Richard Mays, a senior enforcement official at the EPA, acknowledged there was a nationwide probe against Illinois-based Waste Management, Inc., which began last year after some states cited the company for alleged toxic waste disposal violations. The Journal, quoting government sources, said the EPA had discovered more than 100 civil violations and possible criminal violations against Waste Management. Walter Barber, a vice president with one of the company's subsidiaries, denied the charges, saying, "There hasn't been any criminal activity at any of our sites." The EPA investigation is only one of several problems confronting Waste Management, as Art Hackett of public station WHA in Madison, Wisconsin, reports.

ART HACKETT [voice-over]: Just about every state has seen a case like this -- barrels of chemicals buried illegally. This site was uncovered in Wisconsin on the banks of the Mississippi River. Then, starting in about 1980, new laws were passed to make sure toxic wastes went to secure landfills. But many of those turned out to be not so secure. This facility near Milwaukee spilled over into the groundwater. Now the push is for incineration or other treatment to make the chemicals nonhazardous or at least less likely to cause problems. The laws get tougher and tougher. As a result, the toxic waste industry is getting bigger and bigger.

NARRATOR [Waste Management film]: With assets of more than $200 million, the company owns and operates chemical waste transfer, transportation, treatment and disposal centers across the nation.

HACKETT [voice-over]: The business is getting big enough to have its own trade shows. This one, held in Chicago this summer, was aimed at bringing waste disposers together with firms that have toxic wastes to get rid of. There is an estimated $500 to $600 million worth of business at stake. One firm will get about 30% of that business, a firm that is but a small part of Waste Management, Inc., a billion-dollar-plus company which is the biggest trash collector in the free world.

[on camera] WasteManagement Incorporated got to be the largest trash collector in the free world by buying up one small rubbish firm after another. That's been true of their chemical wastes subsidiary as well, but there's another factor at work in the toxic waste business. Given the difficult regulatory environment, small firms have a very tough time competing.

JOE KNOTT, president, Chemical Waste Management Inc.: It is true that it's difficult to maintain the competence in a smaller company that we can maintain in a large company like our own. I think it's a fair characterization, however, that the game is getting more difficult. And those who have the talent to maintain the standards required will be survivors, and those who don't won't be survivors.

HACKETT [voice-over]: Despite what Joe Knott says, his company's image to some people is not that of a knight come to rescue the environment from illegal dumpers. Bob Ginsberg is a toxicologist with Citizens for a Better Environment, a group which has often fought with Waste Management before regulatory agencies.

BOB GINSBERG, environmentalist: One of the problems that we've had for many years at Waste Management is this growth by acquisition that they have pursued has not been accompanied by quality control and management oversight of the facilities they've purchased. And that's led to many of the problems.

CHARLES MURDOCK, Deputy Illinois Attorney General: We're talking about a big company, a growth company, a company that's growing. What happens is, you know, under the best of circumstances, you outstretch the capability of management to watch over it.

HACKETT [voice-over]: Charles Murdock is deputy attorney general for the state of Illinois. His agency is suing Waste Management for taking chemicals for which it didn't have a permit at this landfill near Chicago and then failing to file documents which would have shown the violation.

Mr. MURDOCK: You had somebody, you know, in that system that wanted to take care of the customer. It was a good customer and he wanted to keep the business coming. You know, they probably, I don't know if they've got targets and quotas and stuff like that, but generally that's the way things get managed and people try and, you know, maintain those so they get their bonus or whatever. And sometimes they start stretching a little bit, or winking a little bit.

HACKETT [voice-over]: The Illinois site isn't the only Waste Management facility where problems of this sort are alleged. Colorado's Department of Health alleges Waste Management kept two sets of logs on these evaporation ponds near Denver. One of them, which showed leaks, was allegedly withheld from inspectors. Waste Management contends the leaks never passed through a secondary barrier and represented no environmental threat. But an administrative law judge fined the firm $40,000 and leveled what may be an even more serious charge in his ruling.

[interviewing] It says, "Instead of complying with the regulations, the respondent" -- that's you -- "devoted considerable time and effort to find ways to avoid compliance."

JEFF DIVER, vice president, Chemical Waste Management Inc.: That was not at issue in the case. That was obviously gratuitous language.He is accurate in his concept, and we advised the public through the press at the time that this was initially revealed, if you will, through the press, that on reflection we think it was handled poorly, that even though we considered that we were not regulatorily required to note this information in site records, or to notify people at the regulatory agencies, that it would have been better had we done it.

HACKETT [voice-over]: In the case of both the Colorado and Illinois sites, there are allegations that Waste Management employees warned their superiors of the dangers or improprieties of what was happening but were ordered not to tell regulatory agencies. Because of the problems at these and other sites, Waste Management contends it has adopted new controls and a new attitude.

WALT BARBER, vice president, Chemical Waste Management Inc.: The guidance I've heard them given is that compliance with the law is their highest priority ahead of the profit motive, that there is no alternative to compliance.

HACKETT [voice-over]: Walt Barber is a former U.S. EPA official who is now a Waste Management vice president.

Mr. BARBER: We've hired compliance officers and assigned sites, all of our sites to compliance officers who report to me -- they don't report to the line management of the company. Their job is to independently review the activities of the site, the record keeping at the site, and the performance in terms of compliance, and to identify questions, areas of concern which we proceed to resolve. The highest priority of the company is to avoid exposure of people to hazardous waste and to avoid environmental damage.

HACKETT [voice-over]: But Waste Management's critics say the company's lobbying record flies in the face of that claim. They contend the record is biased in favor of landfills, like this one Waste Management operates in Emelle, Alabama. Citizens for a Better Environment's Bob Ginsberg claims Waste Management has tried to bend proposed rules to make landfilling of hazardous wastes easier than treating them.

Mr. GINSBERG: Historically, Waste Management has not aggressively pushed new technology.They either buy it and then sort of develop it and run it into -- operate it for as long as possible, and then when they're pushed they'll buy another company which has new technology.

HACKETT [voice-over]: And that is exactly what Waste Management just did. They purchased SCA Services of Boston.SCA, the third largest hazardous waste disposer in the country, has become somewhat of a darling with environmental groups. After some costly disasters at its landfills, SCA started turning towards new technology. It bought this troubled money-losing incinerator near Chicago and turned it into a money maker by obtaining one of only three permits in the country to burn polychlorinated biphenals, or PCBs. These are toxic compounds which for the most part cannot be legally disposed of in landfills. But Ginsberg worries what he feels is Waste Management's style may cause problems with a high-tech facility.

Mr. GINSBERG: Anybody, if they're not going to maintain it properly, not going to have enough oversight on what's going on, probably you could have exposure to very toxic materials coming out of that stack.

HACKETT [voice-over]: Waste Management officials insist they have plenty of qualified people and their effort to prolong landfilling means nothing, other than that the environmentalists are trying to push technology too fast.

Mr. BARBER: We're a service company, and as a service company and as a product of the regulations, we are actually in favor of, and it's in our economic interest, to have the regulations as stringent as the economy will tolerate. If the regulations didn't exist, this industry wouldn't exist. We'd be back to having folks dispose of these materials in the sewers or in the vacant lots. I think the company's perspective has to be one that as you shift to more and more process technology and as you move wastes away from landfills -- and many of them should be moved away from landfills -- that one does it on a feasible schedule, a reasonable schedule that can be achieved and that won't result in wholesale noncompliance with the law for lack of facilities to comply with.

HACKETT [voice-over]: Deputy attorney general Murdock, meanwhile, is worried about growth. Period.

Mr. MURDOCK: And it seems to us that this concentration ultimately must work to the disadvantage of the public, that when you have -- and it's a fairly concentrated industry to start with, it's a nationwide industry, and any more concentration here ultimately will enable, in effect, some of the evils of monopolistic practices to be borne by the consumer. You're not going to have competitive pricing.

HACKETT [voice-over]: SCA's Chicago incinerator, now a part of Waste Management, becomes a part of that competitive problem.

Mr. MURDOCK: Arbuably, they will have access to the SCA incinerator to the exclusion of other people, which will put them in a very strong competitive position. Certainly a few years ago something like this probably would not even be proposed. It's like having either Ford or General Motors suggest that they're going to acquire Chrysler. That's just too much concentration.

HACKETT [voice-over]: Waste Management executives answer both of these complaints together: the company is growing because it's part of an industry where being big helps, and the company is growing responsibly.

Mr. KNOTT: I think Waste Management, Chemical Waste Management is today a natural evolution as an organization, driven by the business, the nature of the business, its evolution, its degree of complexity, continues to grow. That requires additional management talent to cope with that. Earlier on we talked about the nature of the business changing and who will be able to compete.I think this organization has populated itself with the kind of management that can go with the growth. And I think we're talented, we have a group of talented people, all of whom I think dedicate a lot of their thinking time to protecting the environment. That's the kind of person we hire.

HUNTER-GAULT: Yesterday the Justice Department granted tentative approval to Waste Management's merger with SCA. But the decision also placed restrictions on the company's growth in the toxic waste disposal business over the next five years.In Boston, an SCA spokesman said the merger could be completed within a week. Jim?

LEHRER: Again, the major stories of the day. Israel finally has a new government, one of power sharing between the Likud and Labor parties.

Diana, now a tropical storm, continues to menace lives and property along the Atlantic coast of North Carolina, but the worst is over.

And Walter Mondale and President Reagan were among those who spoke today about Social Security, Medicare and other problems of the nation's elderly.

Good night, Charlayne.

HUNTER-GAULT: Good night, Jim. That's our NewsHour for tonight. We'll be back tomorrow night. I'm Charlayne Hunter-Gault. Good night.