The MacNeil/Lehrer NewsHour

INTRO

ROBERT MacNEIL: Good evening. The space shuttle Discovery made big news again today. For the second time this week its free-flying astronauts recovered a wayward satellite. Nicaragua maintained its military alert, but agreed to talk with the United States. Baby Fae is recovering from her body's attempt to reject its transplanted baboon heart. In the Philippines another opposition leader was shot dead. Jim Lehrer is off tonight; Judy Woodruff is in Washington. Judy?

JUDY WOODRUFF: Our focus segments on tonight's NewsHour begin with a talk with a key Nicaraguan opposition leader who looks at the current tensions between Managua and Washington. From the medical beat we take a documentary look at a plan to control the high cost of health care, then hear from a doctor who brings evidence that a new form of eye surgery is successful after all. And, finally, we revisit a special lady who has just been honored with a special award.

Chalk another one up for the astronauts on the space shuttle Discovery. For the second time this week they've plucked a disabled satellite out of its orbit and managed to move it into the shuttle's cargo bay. At 224 miles above the earth it was another unprecedented piece of space salvage. Here's a little of how it went.

[voice-over] Astronaut Dale Gardner looked a lot like a satellite himself as he maneuvered toward the crippled Westar satellite. He moved with the aid of a rocket backpack, and captured it with a pole-like device called a stinger. Using the rocket thrusters in his backpack, Gardner slowly moved the satellite toward the space shuttle. Gardner passed the satellite to his partner Joe Allen, who waited at the end of the shuttle's robot arm. Allen grabbed an antenna on the side of Westar and held onto it by himself for more than an hour. Finally astronaut Anna Fisher, who was inside the shuttle, commanded the arm to move into the cargo bay.

MISSION CONTROL: This is Mission Control. There is the Westar satellite birthed into its pallet structure in the cargo bay.

WOODRUFF: The next media event for the astronauts will be a news conference in orbit tomorrow morning. They'll spend the rest of the day getting ready for their landing on Friday.

Here on earth President Reagan told the Soviet leadership he hoped that relations between Washington and Moscow would improve. The President was replying to a letter from the Soviets congratulating him on his re-election. White House spokesman Larry Speakes said the Reagan administration remains interested in holding talks with the Soviets about weapons in space. But Speakes repeated U.S. objections to the Soviet call for a moratorium on the testing of anti-satellite weapons. Yesterday the Pentagon announced that it had tested an anti-satellite missile fired from a jet fighter.

Robin?

MacNEIL: The government of Nicaragua kept the country on full military alert today, despite repeated Washington assurances that the U.S. does not plan to invade. Military reinforcements were sent to the northern provinces bordering Honduras. It is there the United States leaders claimed the Sandinista leaders would launch an invasion. Foreign Minister Miguel D'Escoto said that Nicaragua have agreed to further talks with the United States on resolving their differences. Officials of the two countries had already had seven rounds of talks in strict secrecy.

In Washington Nicaragua's chief opposition figure, Arturo Cruz, said today that President-elect Daniel Ortega had a tremendous opportunity to achieve peace in Nicaragua.He said that since the elections November 4th everyone is willing to give Ortega a period of grace. The question was whether hardliners within the Sandinistas would let Ortega create the conditions for social peace. At a news conference today, Mr. Cruz, who refused to run as the presidential candidate, also spoke about the effect of the Reagan hardline approach to Nicaragua.

ARTURO CRUZ, Nicaraguan opposition leader: It is not helpful indeed for those who are advocates for democratic political solutions, peaceful solutions, because obviously now the Sandinistas have good reasons for declaring a national alert and that puts

MacNEIL: Later in this program we'll be talking with Dr. Cruz. Judy?

WOODRUFF: Also in the news from Central America, representatives of the warring parties in El Salvador met in a California television studio today. It was the first session between different factions since President Duarte hosted last month's historic meeting in the town of LaPalma. Peter Grauman of public station KCET filed this report.

PETER GRAUMAN, KCET [voice-over]: Although none of El Salvador's principal leaders came to Los Angeles, each major faction was represented -- the government, the left and the right. This made today's meeting the first at which all three sides have met peacefully since the outbreak of civil war more than five years ago.

RICARDO GONZALEZ COMACHO, Minister of Economy, El Salvador: The very fact that we are here discussing in front of the American people, one of the more democratic countries in the world, means that something has changed in El Salvador.

GRAUMAN [voice-over]: Unlike the La Palma talks, El Salvador's right wing was represented in today's debate. Businessman Francisco Quinones, head of the Popular Salvadoran Party, downplayed the prospects for a ceasefire in the civil war that has taken an estimated 50,000 lives.

FRANCISCO QUINONES, conservative leader: Ceasefire. Ceasefire. You'd have a ceasefire situation when you have a sort of a, if you want to call it a conventional war, when you know where the enemies are, what positions do they hold. But in this particular case, the guerrillas don't hold any particular place of the country for too long a time, and it is very difficult to impose on the government of El Salvador to stop defending the different towns and the different places of the country when the guerrillas move constantly and you don't know where they're going to appear next. So ceasefire, to me, is wishful thinking.

OSCAR ACEVEDO, guerrilla representative [through interpreter]: Well, something interesting has come up here. Mr. Quinones has expressed very clearly that he is not interested in a ceasefire in the country, and we are.

GRAUMAN [voice-over]: In the end, perhaps the most concrete development from today's talks was the announcement by government minister Ray Prendez that a second La Palma meeting will take place next month and that the dialogue on peace in El Salvador will continue. For the organizers of today's debate, actor Michael Douglas and the California-based Center for the Study of Democratic Institutions, that in itself was enough.

WOODRUFF: Later this month representatives of the Salvadoran government and rebels are scheduled to meet again. Robin?

MacNEIL: In Chile last night there were 16 bomb explosions in different parts of the country. It was the first violence reported since President Augusto Pinochet declared a state of siege last week to put down growing political resistance to his 11 years of military rule. Here is a report by Graham Shenten of Visnews.

GRAHAM SHENTEN, Visnews [voice-over]: The regime of President Augusto Pinochet had hoped the state of siege declared last week would enable it to quell the rising tide of protest in the country, but in open defiance of the military government the demonstrators are still on the streets. Five hundred university students staged an outdoor rally in support of calls for two days of national protests later this month against Pinochet's government. They chanted for a return to democracy. The students even took the protest to the university canteen. A midnight-to-dawn curfew and police raids on a Santiago shanty town were two of the early moves in last week's crackdown and, on this occasion, the riot police moved quickly to make arrests and break up the demonstration. But this battle of the streets will continue. Only hours later, bombs exploded in several Chilean cities, one outside the Ministry of Defense in Santiago.

MacNEIL: Later today the archbishop of Santiago, Juan Francisco Fresno, denounced the state of siege saying it had brought confusion, fear and anguish to Chile.

In other foreign news, in the Philippines, one of the best-known political opponents of President Marcos was shot dead today by an unknown gunman. The victim was Cesar Climaco, mayor of the city of Zamboanga, who was shot at point-blank range. President Marcos ordered the armed forces acting chief of staff to investigate.

Lebanon and Israel agreed to resume talks tomorrow on the withdrawal of Israeli troops. The talks broke off last Saturday but were reinstated after mediation by American and United Nations officials. Judy?

WOODRUFF: Here at home there was more evidence today that the economy is going through a period of very slow growth. The Commerce Department reported that retail sales in October dropped for the third month out of the last four. Several private economists pointed to the news as proof that the economy is in a so-called growth recession and said this would be bad news for merchants at Christmas time. But Reagan administration Commerce Secretary Malcolm Baldrige said he still thinks consumer spending will pick up for the rest of the year.

And the name of the new man who will head up the Postal Service was announced today. He is Paul Carlin, a career postal employee currently in charge of the service's regional office in Chicago. Carlin beat out the man the White House had recommended for the job, Ed Rollins, who managed President Reagan's re-election campaign. The decision was made by the independent agency's board of governors.

Also in Washington, a House subcommittee issued a report today accusing the Food and Drug Administration of permitting potentially dangerous drugs to remain on the market available for sale to the public. New York Congressman Ted Weiss, who is the subcommittee chairman, said the FDA has not tested and approved some 5,000 new drugs, including a vitamin E drug that was linked with the deaths of 12 premature infants. Weiss said the FDA has lost sight of its responsibility to monitor the safety of new drugs. A spokesman for the FCA said the agency would have no comment until it studied the report.

Robin?

MacNEIL: In medical news there was a new report today on the controversial eye surgery used to improve vision for people who are near-sighted. The surgery, called radial caratotomy, developed in the Soviet Union, is a source of bitter debate in the medical profession. A study financed by the National Eye Institute and released today says that of 435 patients, every one had reduced near-sightedness with no serious side effects after the operation. For 78% of them vision was improved enough that they no longer needed glasses for most activities. Later in this program we have an interview with the doctor who directed that study.

There was also good news today on the condition of Baby Fae, the infant with the transplanted baboon heart. Early this week her body began to reject the heart. Today she was reported recovering well. At Loma Linda University Hospital in California, Dr. David Hinshaw, professor of surgery, described her condition at a news conference.

Dr. DAVID HINSHAW, Loma Linda Medical Center: For example, she's pink and warm this morning, and I think yesterday or the day before it was noted that she -- that was perhaps omitted from the -- because [there was] worry about her. But she's pink and warm. She's responding well. And we believe that she's in the process of turning around. She wasput back on a respirator, again, not because she was unable to move air by herself, but in certain circumstances this is a wise procedure to save the baby's energy for her other -- and we'll get her -- she'll be back off that as soon as possible of course.

MacNEIL: Dr. Hinshaw also criticized news reports that the baby's parents had been in financial and legal trouble and that hospital officials took advantage of their situation to persuade them to let them go ahead with the operation.

Dr. HINSHAW: I was disappointed and rather shocked, I must admit, as were many of my colleagues, to note the seeming implication in certain releases that -- as a part, I assume, of certain investigative journalistic endeavor, that there seemed to be the implication that physicians and hospitals might take advantage of people who might be in difficult circumstances, to wrest things from them in terms of experimental procedures or what have you. But a clear taking advantage of someone in a desperate situation. Now, if that is true, the whole basis of medicine in the Western civilization context is challenged and attacked at its very roots. Baby Fae would have -- or any other child who appeared in this institution would be taken care of if the best -- we would take care of a foundling. I mean, we're dedicated to that. And the whole profession is. And there's -- we must make -- we must keep that clearly in mind.

MacNEIL: That ends our overview of the day's news. In a moment, our focus sections. Nicaragua: An Opposition View

WOODRUFF: Our first focus segment tonight brings us back to relations between the United States and Nicaragua. In Managua, the defense minister says that Nicaragua's army will stay on alert until the U.S. drops its alleged plans to invade, a charge that has been repeatedly denied by the Reagan administration. In Washington, U.S. officials say that Nicaragua is getting more Soviet military aid, aid that goes beyond Nicaragua's defensive needs. And in Honduras, seven different U.S. military exercises are underway. Charles Krause has this background report.

CHARLES KRAUSE [voice-over]: The U.S. military buildup in Central America began well over a year ago as a warning to Nicaragua. Since then the United States has created a significant military presence in Honduras, which lies at the heart of Central America and borders Nicaragua. The joint U.S. command headquarters is located at Palmerola Air Force Base in Honduras. It is here that most of the current U.S. military activity is taking place.According to the Pentagon, more than 500 U.S. soldiers are now engaged in seven separate exercises. Although U.S. troops were known to be in Honduras, the current round of exercises did not become public until today.

At Palmerola's U.S.-built field hospital, a U.S. Army medical team from Fort Stewart, Georgia, is now in training. A-37 attack planes from Pennsylvania and 0-2A reconnaissance aircraft from Panama have been flown here as part of the exercise. Meanwhile, the Pentagon says a small number of Green Berets is now conducting counterinsurgency maneuvers with the Honduran army. Still other U.S. troops are building roads and patrolling U.S.-built airfields.

The military exercises began last week shortly after President Reagan's re-election, while attention was focused on a Soviet freighter. Administration officials feared the ship was carrying Soviet-built MIG jet fighters to Nicaragua. Pentagon spokesman Michael Burch says the U.S. military activity in Honduras is meant as a warning to Nicaragua not toacquire MIGs or other weapons that could be used against its neighbors.

MICHAEL BURCH, Pentagon spokesman: I think it's reminding them that perhaps they should not have any designs on their neighbors in weaker countries such as Honduras and El Salvador.

KRAUSE [voice-over]: Today at the State Department spokesman John Hughes said Soviet arms shipments to Nicaragua are continuing. Hughes blamed the Russians for creating a situation which he said was comparable to the Cuban missile crisis of 1962.

JOHN HUGHES, State Department spokesman: They are clearly not being helpful, and the kind of actions on which they are embarked are destabilizing.

KRAUSE [voice-over]: For its part Nicaragua's leftist government has accused the Reagan administration of creating the current crisis as a pretext to invade Nicaragua. The country has been placed on military alert. Tanks are now in place in Managua, and fresh troop reinforcements have been sent to Nicaragua's border to help repel a feared invasion from Honduras. The United States has denied any plan to invade, but the continuing Soviet arms shipments to Nicaragua and the continuing U.S. military exercises in Honduras have escalated tensions in Central America to their highest point in recent memory.

MacNEIL: We get a different perspective on the tensions between Managua and Washington now, that of Nicaragua opposition leader Arturo Cruz. He had planned to run against the Sandinistas in Nicaragua's recent election, but withdrew, complaining that he could not campaign without restrictions. Before he joined the opposition, Mr. Cruz served in the Sandinista government as president of the Central Bank and ambassador to Washington. He joins us tonight from public station WGBH in Boston.

Mr. Cruz, do you think the United States and your country are on a collision course?

ARTURO CRUZ: I don't believe that we are facing imminent war, but certainly there is a confrontation between the two governments. This situation is the result of Sandinista imprudence, and we Nicaraguans are reaping the consequences of the harvest of that imprudence.

MacNEIL: Does that imprudence extend to posing a military threat to Nicaragua's neighbors, as the U.S. government says?

Mr. CRUZ: Well, the unbelievable and unjustifiable militarization of my country has created tensions in the area. But it's not so much the militarization as the lack of pluralism inside Nicaragua. You see, the real solution lies in the democratization inside Nicaragua so as to appease Central American misgivings.

MacNEIL: And those would include the misgivings of the Contadora nations as well as the United States?

Mr. CRUZ: Well, the Contadora nations have done their best, but I think they have not been forceful enough.

MacNEIL: I see. Did I understand you, therefore, to say you do not think that even with this military buildup that the Sandinista government poses a direct military threat of attack to Honduras or Costa Rica?

Mr. CRUZ: I don't believe that the Sandinistas have any intentions whatsoever of attacking Honduras. But because of the lack of freedom inside Nicaragua we have now a civil war which might lead to an escalation of the conflict becoming regionalized, and then is when you have the danger of a U.S. intervention.

MacNEIL: You think there is some danger of a U.S. intervention?

Mr. CRUZ: If the Sandinistas do not introduce a change in the orientation being given to the revolution. I believe that Daniel Ortega has that challenge, to change the orientation towards democratization.

MacNEIL:What did you mean in your news conference, which we quoted briefly earlier, when you said that the United States had given the Sandinistas good reason for declaring an alert?

Mr. CRUZ: Well, yes. If you have foreign airplanes overflying Nicaragua, if you have foreign vessels offshore in Nicaragua, that gives a good reason for the Sandinistas to declare an alert. But that translates itself into further damage to our already critical economic situation and, more important or rather more and even adder, is the fact that peaceful political opposition is squeezed out.

MacNEIL: Now, to go back then a step. Do you think that the Reagan administration's approach is the right approach to achieving peaceful democratic government in your country and Central America?

Mr. CRUZ: Well, the two-track approach is now a fact of life, unfortunately. What really matters is for both Managua and Washington to find the peaceful, logical solution.Both must contribute to that effort. In the case of the United States there should be a strong reaffirmation of its will, of its commitment to find a peaceful solution, but also Nicaragua should make its own contribution -- I mean, the Sandinistas, with the democratization of the country. Only if we have pluralism in my country we will have social peace, and only if we have social peace in Nicaragua there will be peace in the rest of the region.

MacNEIL: What do you understand the Reagan administration's goals to be in Nicaragua?

Mr. CRUZ: I believe that the Reagan administration goals are very clear. I don't see any intention of launching an invasion against Nicaragua. I don't see any intention of bringing back the past. But what I see is in fact a desire of Washington to have pluralism in Nicaragua, to have a government that really represents the will of all Nicaraguans, that freedoms be guaranteed, that we don't have these continuing on-and-off situations where, let's say, freedom of the press is granted occasionally for tactical reasons, whereas now, as soon as the electoral process was over the editors of La Prensa were told by the official censor to her office and notified that the electoral picnic was over. And La Prensa is being thoroughly censored now. We need freedom. That's what we need in order to build peace in Nicaragua and therefore in the region.

MacNEIL: Now, did I understand you to be suggesting a moment ago when you talked about -- you said unfortunately the two-track approach of Washington is in place, that, while you think the negotiation side of that is good, did I understand you to say you don't think that the pressure -- helping the contras, the economic pressure on Nicaragua and these displays through the military exercises, you don't think they are helpful?

Mr. CRUZ: Well, that's why I say unfortunately because it -- I hate as a Nicaraguan, it really makes me suffer to have to admit that the military pressure from the standpoint of the United States might be successful because if there is any political opposition inside Nicaragua today, in great measure it is due to that military pressure. But in order to have permanent peace what we need is democracy.

MacNEIL: What would you advise the Reagan administration to do to achieve its goals of pluralism in Nicaragua, which are also, I gather, your goals?

Mr. CRUZ: Well, what the United States government should do at this point in time, in my judgment, should be to continue supporting the political solutions in Nicaragua and to work in the direction of exerting friendly pressures on the new government ofNicaragua, which is a de facto government -- I do not consider it to be a legitimate government, but it's a de facto government -- to exert the pressure on the Sandinistas to make a real political opening which should include a number of steps such as amnesty, calling for really true and free elections and guaranteeing all the freedoms such as the freedom for the press, freedom of political organization. That's where the emphasis should be placed.

MacNEIL: Do you think that the Reagan administration should resums support for the contras if it could get congressional approval?

Mr. CRUZ: Suspension of support to the Nicaraguan rebels should be part of an overall solution in which the Soviet Union, the Soviet bloc and Cuba should also commit themselves to stop supporting the militarization of Nicaragua, and it should also include a commitment on the part of the Sandinistas to move towards democracy.

MacNEIL: Thank you very much, Mr. Cruz.

Mr. CRUZ: My pleasure, sir.

MacNEIL: Judy?

WOODRUFF: Still ahead on the NewsHour, we take a documentary look at efforts to control the high cost of medical care. We hear some good news about a new form of eye surgery that will reduce many people's need for eyeglasses. And we revisit a special lady who has been honored with a special award. Cutting Down Medical Costs

MacNEIL: Our next segment's focus is on medical costs. In all the speculation about where President Reagan will find budget savings, medical care is high on most of the lists. The New York Times reported today that the administration is considering a plan to cut Medicare costs by paying doctors a flat fee for their work on patients in the hospital. The spiraling cost of medical care is not only a federal government concern. The single biggest spender on health care is not government but private business and insurers. As we see in this report by Kwame Holman, a growing number of companies are trying to reduce those costs.

KWAME HOLMAN [voice-over]: The painful pinch of rising medical costs is causing more and more American companies to take a long, hard look at how much employee health benefits are costing them. In particular, the automobile companies such as Chrysler are finding that medical inflation is hurting their ability to compete with foreign car companies whose health care costs are much lower. The director of employee benefits for Chrysler is Walter Maher.

WALTER MAHER, director of employee benefits, Chrysler Corp.: We are involved in some pretty hefty competition with imports, and we've done some comparable studies for our Japanese partner, Mitsubishi, and their comparable cost per car is significantly less. Put another way, they spend on average in Mitsubishi about $815 per worker for health care costs. Chrysler, which has almost one retiree for every active worker, pays not only for our active workers but also our retirees. So our costs -- if you put all those costs together -- per active worker is about $5,700.

HOLMAN [voice-over]: In fact, health insurance will add more than $500 to the cost of every Chrysler car. To pay its $400-million medical insurance bill, Chrysler will need to sell 70,000 cars this year alone. One of the people working to bring down Chrysler's health care costs is Joseph Califano. Now a Chrysler board member, he's no stranger to the problem of medical inflation. In 1965 he helped draft the Medicare bill as a White House aide. Later he was Secretary of Health under President Carter. Califano says that today corporate health care costs are out of control.

JOSEPH CALIFANO: And how did we get to that stage? We got to that stage because business and labor -- big business and big labor made a host of agreements, beginning with World War II and continuing thereafter until recently, in which they basically turned over to the hospitals and the doctors the power to raise costs on them. They agreed to health care benefits, not to dollar amounts.

HOLMAN [voice-over]: Califano and Chrysler's management want to regain control of health costs by encouraging workers to join cost-conscious medical plans such as health maintenance organizations, or HMOs, like this dental HMO near Detroit. The advantage of an HMO is that a company only pays a set yearly fee for each of its workers. The yearly fee remains the same no matter how many teeth are filled or X-rays taken.That in turn encourages dentists to be more efficient and cost-conscious in their treatment.

Mr. MAHER: We're looking at trying to implement as many competing alternative health care delivery systems as we can. That's why we've recently introduced in Illinois, Indiana and Michigan dental alternative delivery systems, which are saving us substantial sums, at the same time offering our employees enhanced benefits.So it's sort of a win-win situation.

HOLMAN [voice-over]: The incentive for workers to join Chrysler's dental HMO is simple: it's free. If they don't join, workers have to pay part of each dental bill out of their own pockets, with Chrysler picking up the rest in a so-called co-payment arrangement. As result, it's cheaper for workers to join the HMO than to visit a private dentist. But there's no similar incentive when it comes to Chrysler's medical coverage. Chrysler's union contract calls for the company to pay just about all of the workers' medical bills whether workers join an HMO or not.

Mr. CALIFANO: Chrysler's costs stem from the fact that Chrysler and the United Auto Workers have a wide-open, first-dollar coverage agreement with no incentive on anybody in the system -- the worker, the doctor, the hospital, the laboratory, the drug provider -- to do anything efficiently because the whole tab is picked up.

HOLMAN [voice-over]: To get workers to join medical HMOs, Chrysler wants to change the union contract and have workers pick up more of their own medical bills, with the agreement that if a worker joins a medical HMO the company would underwrite the entire cost. But the United Auto Workers aren't buying that idea, and their president, Owen Bieber, says the issue of adding co-payment to the traditional health care coverage is non-negotiable.

OWEN BIEBER, president, United Auto Workers: Well, let me repeat what I've said many times in the last year. Number one, we are not willing to just -- to an agreement which just shifts the burden to the back of the employee. Co-pays and deductibles are not acceptable to us. It's not the answer to meaningful cost reduction. All that is is a shifting of the burden.

Mr. CALIFANO: We have a situation now in which the United Auto Workers and the American Medical Association are in lockstep when it comes to the UAW health care benefit contract. They both want the same fee-for-service, cost-based reimbursement system that they've had for the last 20 years. And who would have ever thought we'd see the day when labor became one of the most reactionary forces in trying to change the health care system?

HOLMAN [voice-over]: But while the UAW has not been as responsive on the health care issue as Chrysler would like, the union has shown a willingness to innovate in this area at other companies.

[on camera] Here at John Deere and Company, the farm equipment maker, the UAW has worked closely with management to set up the kinds of programs that Chrysler and the other automakers want to put in place. The result is what many experts are calling one of the best strategies in American industry for fighting medical cost inflation.

[voice-over] Today almost 50% of Deere's union employees are members of HMOs, most of those established with the company's help. Deere was successful in getting the union's cooperation because the company did not insist on adding additional co-payments to the traditional worker coverage. Instead, Deere tried to make the HMO option more attractive to workers. The director of the UAW at Deere is Jim Hacker.

JIM HACKER, director of UAW/John Deere: So we both agreed up front that at least if we were going to develop an HMO, that it had to deliver more benefits with the same kind of quality than what people were used to receiving. So we've done that.

HOLMAN [voice-over]: The big advantage for workers, says Hacker, is that with Deere's HMO they get free, unlimited doctor's office visits. Under the traditional plan, workers paid part of those fees. The union has also agreed to let Deere set up a medical panel to screen hospital admissions of employees, ensuring that no worker is admitted unnecessarily or stays longer than he should. The policies seem to work.The number of hospital days for Deere employees is down 40%. The director of Deere's health care program is Dick Van Bell.

DICK VAN BELL, Director of Health Care, John Deere: If we are going to see the system brought under control, it's going to be in part because of our efforts, along with those of a number of other people who are involved in the system, whether it's providers or labor unions or some other group that has an interest in the issue. We believe that we are beginning to manage these costs -- industry, federal government, working with labor. I'm optimistic.

HOLMAN [voice-over]: Still, as with most efforts to contain health care costs, there's a good-news/bad-news aspect to this story. The good news is that Deere's health care costs have grown less than those of companies that haven't taken any action. The bad news is that, despite their innovative efforts, Deere's health care costs have almost doubled since 1977.

Mr. VAN BELL: Our costs continue to go up. We never really felt that getting actively involved in health care issues that we could reasonably expect that the costs were going to go down. When you look at the advances in technology and what is exploding there, you have to assume that health costs are likely to go up.

HOLMAN [voice-over]: Deere's cost-containment problems come as no surprise to Sean Sullivan, a health care costs expert with the American Enterprise Institute.

SEAN SULLIVAN, American Enterprise Institute: Until enough other companies join Deere in doing some of the things that they have done, the whole system isn't going to change very rapidly. Deere is one company bucking up against a system that is much, much larger than Deere can possibly affect beyond its own local circumstances.

HOLMAN [voice-over]: But another expert, Dr. William Schwartz, professor of medicine at Tufts University, offers a different explanation for why Deere has not been as successful as it hoped.

Dr. WILLIAM SCHWARTZ, professor of medicine, Tufts University: I think efforts designed to eliminate inefficient and wasteful practices are well worthwhile. They will save money. But at the same time there are other forces at play in the system. The main force is new technology.

HOLMAN: Dr. Schwartz believes that new technologies, like this CAT scanner, as well as organ transplants and bypass surgery, are the real gremlins that drive up medical costs, and, he says, the only way to limit the cost of technology is by rationing medical care. For a vision of what America's future may hold, Schwartz points to Great Britain, where rationing has proven to be an effective, if troubling, solution.

[voice-over] In his new book, The Painful Prescription, Dr. Schwartz compared the two health care systems. He found that the British system, which is government-run, works fairly well and is well-liked by the British. In fact, while the life-expectancy of the average Briton is the same as an American, their cost per citizen is less than a third. The key reason for the lower cost, says Dr. Schwartz, is that British doctors, who are salaried by the government, have no profit motive in making health care decisions.

Dr. SCHWARTZ: His or her income will not be affected by a decision to forego CAT-scanning in favor of coronary artery surgery or any other decision. There is no pocketbook nerve that is struck by these allocation decisions.

HOLMAN [voice-over]: British doctors have one other limiting factor -- a pre-determined hospital budget set by the national government. Limited budgets have restrained the use of new technology in Britain. For example, on a per-capita basis, the U.S. has six times as many CAT scanners as Britain. This lack of resources is most dramatically illustrated, says Dr. Schwartz, by access to kidney dialysis. Without dialysis or a kidney transplant, most patients with serious kidney disease would die. In America anyone why needs dialysis will get it, and it is paid for by the federal government under Medicare.

Dr. SCHWARTZ: In Great Britain that isn't true. Approximately half of patients with chronic kidney failure die without definitive treatment -- dialysis or transplantation. The British internist did not refer older people with serious medical disease who, in this country, would be placed in treatment.

HOLMAN [voice-over]: This rationing approach is also applied to other medical technologies, from heart bypass surgery to cancer treatment.

Dr. SCHWARTZ: The physician in England is asked to be the gatekeeper in the system. The physician in Britain is asked to make sure that the specialized facilities, be it bone-marrow transplantation or open-heart surgery or whatever, is not overloaded. They have to rationalize. They have to find reasons not to refer.

HOLMAN [voice-over]: As medical technology in this country becomes increasingly sophisticated and expensive, Dr. Schwartz predicts a day of reckoning must come here, too, a day when Americans will be forced to decide either to ration medical care or pay more and more for the medical marvels that are saving lives.

Dr. SCHWARTZ: There is no law, there is no requirement, there is nothing written in stone or steel that says we can't spend an ever larger amount of gross national product on hospital care or health care if we as a society choose to do so. We're spending nearly 11% of GNP on health care now. If we spend 12, 13, or 14, it may be viewed by the country as a whole as a perfectly reasonable choice. And I for one would be reluctant to make a call on how that decision will go once the reality presses in, once people are being denied care. Cutting Out Glasses

WOODRUFF: That report by our correspondent Kwame Holman. There is one medical problem that is common to one out of every five of us. It's the reason so many of you need eyeglasses just to see this television screen. The condition, of course, is near-sightedness or, as the doctors like to call it, myopia. Until recently if you were near-sighted and you wanted 20/20 vision you had only two choices -- glasses or contact lenses. But now there's a third option, eye surgery. Today a team of doctors reported that a relatively simple surgical procedure is generally effective and safe in correcting near-sightedness. Here's how it works. In the normal eye with perfect vision, the cornea and lens on the surface of the eye work together to bend light so that it falls directly on the retina at the back of the eyeball.In near-sighted people the eyeball, and therefore the cornea, is elongated, causing light to fall just short of the retina. With this new surgery the doctor can change the shape of the cornea, making a series of tiny incisions in a radial pattern on the surface of the cornea. When the cornea heals, it flattens, returning the focus to normal. Today's report was the first compre-hensive study of this new technique known as radial keratotomy. It is expected to quiet some of the skepticism about the procedure, which has only been practiced in the United States for a few years. One of the directors of the study is Dr. George Waring, an eye surgeon at Emory University in Atlanta. He presented today's report at the annual meeting of the American Academy of Ophthamology, also in Atlanta, and he joins us from there tonight in the studios of Georgia Public Television. Thank you, Dr. Waring, for being with us.

Dr. GEORGE WARING: Thank you, Judy.

WOODRUFF: First of all, tell us about your study, and how do you know just how reliable it is?

Dr. WARING: Judy, we studied radial keratotomy for the last four years in a carefully controlled fashion in the Prospective Evaluation of Radial Keratotomy study. We studied about 435 patients and have followed them for only one year, and our report today was a one-year followup. Therefore it's a fairly short-term followup. While we did find that myopia was reduced in all of the patients' eyes, we wish to emphasize that the reduction was most effective in the people with smaller degrees of myopia. That is, smaller amounts of near-sightedness.

WOODRUFF: So exactly what are you recommending then for people who are near-sighted as a result of your study?

Dr. WARING: Judy, what people should do who are near-sighted is to meet with their private ophthamologist and have a thorough eye examination, review the situation with their own glasses and contact lenses, and if their glasses or contact lenses work satisfactorily, they should stick with those. They may wish to try extended-wear soft contact lenses which can be worn a month or more without removing them before entertaining eye surgery.

WOODRUFF: Well, then who is most likely to benefit from the radial caratotomy, the surgery?

Dr. WARING: The individuals, Judy, most likely to benefit are those with smaller amounts of near-sightedness. The benefit may increase as we further refine the surgery. The operation is still in a transitional or developmental phase, and the techniques that we use today probably will not be used a few years from now. Therefore those people who are basically satisfied with their correction might want to consult their doctor and see what the developments are. Those who arenot satisfied or have a pressing need because of problems with their glasses or contacts might be candidates for the surgery if their eyes are healthy.

WOODRUFF: Tell us a little bit more about what you found in terms of some complications in some of the patients.

Dr. WARING: Judy, the major complication we found was a difficulty with the predictability of the operation. By that I mean for a specific individual we could not tell exactly where they would end up one year after the surgery. They might end up overcorrected. By that I mean the surgery had too much effect, and therefore they would become farsighted. This happened in about 10% of our patients, and these people might swap their near-sighted glasses for their far-sighted glasses if they're in their 40s or 50s.

WOODRUFF: So no real help for those people, in other words?

Dr. WARING: Some help, but they're still dependent on spectacles, particularly for reading. Other people are undercorrected. That is, they're still near-sighted, and while they may be able to see better without their glasses, they may still need a correction.

WOODRUFF: What percentage, would you say, of those patients that you studied had perfect results, or is it too early to know?

Dr. WARING: No, we can define a good result as between one diopter, that's one unit, from a perfect result, and in the lower group that we studied, the people whose glasses aren't very thick, we found that 75% of those individuals fell within this tolerable range, and 85% of them could see 20/40. By that we mean about drivers license vision. The people with higher degrees of near-sightedness and of course thicker glasses did not fare as well.

WOODRUFF: What about the surgery itself? Do you have to go into -- we didn't explain this part, but do you have to go to a hospital to have it done, or exactly how complicated is it?

Dr. WARING: Judy, the technique itself has technical refinements, but for the patient it's rather simple. It is almost always done as an out-patient procedure. The anesthesia is eyedrop anesthesia, which numbs the surface of the eye, and the operation takes about half an hour, and although there is discomfort after the operation for a few days, and for some patients enough pain to require pills, that goes away after a few days.

WOODRUFF: How long does it take for the eye to heal?

Dr. WARING: This is one of the problems, Judy, that we found in our study. We examined the refraction between six months and one year, and we found that in half of the patients it was still changing. Another researcher from a different study today reported that as long as four years after the surgery 25% of his patients' eyes were still changing. So the corneal tissue heals very slowly.

WOODRUFF: What about the cost of the surgery at this point?

Dr. WARING: The cost of the surgery varies a great deal, probably because there is not a standardized technique for the surgery, and the patient and the doctor work out the cost themselves.

WOODRUFF: Can you give us a range for somebody out there who may be interested?

Dr. WARING: Judy, the range is probably from $500 to $2,000 per eye.

WOODRUFF: All right. It sounds as if you're saying that you're really not recommending that everybody who wears glasses for near-sightedness run out to their eye doctor and say, "Hey, am I a candidate?" I mean, it's still not quite at that point yet. Is that correct?

Dr. WARING: You state it properly.

WOODRUFF: Well, then what you are saying is that for those people who are not totally satisfied with their glasses, it's something they might consider but knowing that there are still complications?

Dr. WARING: That's correct.

WOODRUFF: Okay. What about long-term effects? The grey area, the unknown area still? I mean, how much more research would you like to see done before you're more satisfied?

Dr. WARING: In our study, sponsored by the National Eye Institute, we have four more years to follow these patients. So we will be able to offer a five-year followup, which is an intermediate-term followup. We will need 10 or 20 years, however, to find out the full impact of the surgery. For example, if somebody who is now 25 has this operation and at age 60 develops a cataract which will require a further operation, will the eye be able to withstand that surgery safely? It's a completely unknown question. The good news is that we did not identify in our first year of the study any potentially blinding problems, anything that we saw that might make the patient lose all of their eyesight from this surgery, unless a horrible unusual complication came up like an eye infection.

WOODRUFF: It's interesting but it sounds like it's still something that applies to a minority of people with near-sightedness.Thank you, Dr. Waring, for being with us.

Dr. WARING: Judy, you're very welcome.

WOODRUFF: Robin? Miraculous Mom

MacNEIL: Finally, in New York today there was an awards ceremony to honor outstanding women in various fields. They were presented by the Wonder Woman Foundation created in 1981 to highlight the 40th anniversary of Wonder Woman, the comic book heroine. One of the 14 recipients was Clara Hale, who we met last July in a report by Charlayne Hunter-Gault, and here is her story once again.

CHARLAYNE HUNTER-GAULT [voice-over]: Down these mean streets of Harlem a quiet little miracle is going on, all day and all night, every day of the week. It's going on inside of this tidy, five-story brownstone known as Hale House. It is named for the miracle worker who lives here, 79-year-old Clara Hale. Every day for the past 11 years Clara Hale has been the moving spirit behind the work that goes on here, the caring, feeding and nursing back to health babies who were already drug addicts when they were born -- babies like Rafael Frazier, 16 months old. His mother was addicted to heroin and cocaine during her pregnancy. Two weeks after Rafael was born, she brought him to the woman known throughout the community as Mamma Hale.

CLARA HALE: The doctor didn't really think he would live because he seemed -- and he way, you know, going through the -- you know, from the drug. The mother's a drug addict. And he had it very bad. And I worked on him because I keep them upstairs in my room until they're four months. And I worked on him and brought him out. Now, the doctor didn't believe he's the same baby. He can't understand it because he's nearly 14 months and he's a big man.

HUNTER-GAULT [voice-over]: Clara Hale, the mother of three children, has always taken care of children. After her husband died she supplemented her income by taking in foster children. By the time she was 65 and had reared nearly 40 of them, she decided to quit.

Mamma HALE: There's enough of me to go around to all of you so don't fight.

HUNTER-GAULT [voice-over]: But Lorraine Hale, her daughter, wouldn't let her quit.

LORRAINE HALE: I was leaving my mother's apartment on West 146th Street, and I was at the corner waiting for the light to change, I was driving. And I saw a woman sitting on a box and she was nodding, and I watched her andwas rather fascinated because she had a baby. So I watched and got out of the car, went over to her and said, "Look, you know you're in a lot of trouble. You need someone to help you with this baby. My mother takes care of children, she lives down the street. Take the baby to her."

Mamma HALE: I think all the addicts in New York sent their kids to our house.

HUNTER-GAULT: How did you know what to do with these addicted babies?

Mamma HALE: I didn't. I just sort of prayed about it. I didn't know what to do. But I fed them. There's nothing special you could do. I knew one thing, if it was addicted, you know, I knew that it was an addicted baby, that I wasn't to give it any drugs or any medicines so then it would be crying for that later on. So I never gave it anything. Nothing. I would walk the floor and I'd talk to it, and I'd feed it. That's all. And I kept it dried and clean and a bath every night. So finally they turn out just like babies, and I had reared so many babies until I -- really, a baby's a baby, that's all.

HUNTER-GAULT [voice-over]: Since 1969 close to 500 addicted babies have been cared for at Hale House, sent by city agencies, police, hospitals. The children are accepted up to three years old, and their parents must agree to enroll in a drug or alcohol rehabilitation program. Hale House gets some government funds as well as private donations. A staff of seven is headed by Mrs. Hale's daughter Lorraine, who has her Ph.D. in child development.

Ms. HALE: My mother has a philosophy of childcare and child rearing which she believes works, and which certainly has worked for her. The philosophy is a lot of love, a lot of love, a great deal of respect for the child as a person and the sense of responsibility that the child needs to have in growing up. The child must know that he's responsible for himself, as opposed to the environment causing you whatever problems you may find that you have. And it works quite well.

Mamma HALE [saying grace]: Thank you for the world so sweet, thank you for the food we eat, thank you for the birds that sing, thank you, God, for everything. Amen.

I really don't have time to be depressed. You're working on something.You're trying to bring something out, and if you had time to think about, you know, how bad am I feeling, if you look at this child and you feel so sorry for the child and you wonder, will he be all right, will he grow up all right? You know, when will the day come that he'll stop scratching himself? So you don't have time to be depressed. Like I'm saying to you, I think I have a mission in life, and this is it.'Cause at 65 most women are tired, they don't want to be bothered, and I said at 65, "Well, I don't have to work anymore. My daughter's able to take care of me, and why should I take care of children?" And at 65 I started all over again.I'm 79 now and I'm still at it.

MacNEIL: And today Ms. Hale got a Wonder Woman award and a check for $7,000.Judy?

WOODRUFF: It's a wonderful story. Turning now to a final look at today's top stories: The astronauts on the space shuttle Discovery have successfully retrieved a second out-of-orbit satellite. The astronauts and their cargo return to earth Friday.

Nicaragua says its army will remain on invasion alert, despite U.S. assurances no invasion is planned.

A leader of the Phillippine opposition to President Ferdinand Marcos was shot and killed today. Authorities are searching for the murderer.

And in California there was good news on the condition of Baby Fae. She is reported recovering from her body's efforts earlier in the week to reject her transplanted baboon heart.

Good night, Robin.

MacNEIL: That's our NewsHour. Good night, Judy. That's our NewsHour tonight. We'll be back tomorrow night. Thanks for watching. I'm Robert MacNeil. Good night.