The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight the Supreme Court decision on minority majority Congressional districts, as explained by Stuart Taylor; a Paul Solman preview of the economic summit in Denver; an update on the risks from taking the hormone estrogen; a report from Chicago on a disputed fraud investigation of hospice care programs; and a David Gergen dialogue about Watergate and Vietnam. It all follows our summary of the news this Thursday. NEWS SUMMARY

JIM LEHRER: The U.S. Supreme Court today upheld Georgia's congressional redistricting plan that includes only one majority black district. The vote was five to four. A three-judge federal court drew up the plan after the Georgia legislature failed to do so. The Clinton administration opposed it, favoring one with three majority black districts. The Supreme Court ruled that plan unconstitutional in 1995. We'll have more on this story right after the News Summary. The tobacco talks continued today without resolution, but Mississippi Attorney General Mike Moore said tremendous progress was made today because of tobacco industry concessions. He described what he expected as a final outcome.

MIKE MOORE, Mississippi Attorney General: We have a terrific comprehensive plan to reduce teenage smoking in this country by 30 percent in five years, 50 percent in seven years, and 60 percent in ten years. If we do that, we'll save the lives of millions of Americans; we'll save trillions of dollars; but, most importantly, we'll save millions of lives. We think that the truth ought to be told about the industry. We plan to get that done. We think the industry ought to be punished for what they've done in the past, killing millions of Americans, and we're going to do that. And we think that people who have paid the bill to taxpayers of the country ought to be reimbursed for that. We're going to do that and much, much more. We promise you.

JIM LEHRER: The state attorneys general and negotiators for the tobacco companies are trying to settle huge legal claims against the industry. Forty states are suing to recover the public health costs of treating smoking ailments. Women who take estrogen after menopause reduce their risk of death from heart attacks for about 10 years. But then the risk of breast cancer begins to rise. That's according to a new study published today in the "New England Journal of Medicine." Researchers say long-term estrogen use must be determined on a case by case basis. Estrogen eases the symptoms of menopause. We'll have more on the story later in the program. On the tax cut story today, the Senate Finance Committee continued its work on the proposal of Chairman William Roth. It calls for a $500 per child tax credit and cuts in capital gains and estate taxes. A similar package was approved by the House Ways and Means Committee last week. President Clinton and congressional Democrats have opposed the Republican bills, saying they provided too much tax relief to the rich.

SEN. RICHARD DURBIN, [D] Illinois: What the Republicans suggest is that the folks that are really hurting out there are the people in the $400,00 income categories. I don't buy it. And I don't think the American people buy it. If you're going to send tax relief, send it to folks that are struggling every day of the week to pay for day care expenses and mortgage expenses and paying their tax bills. And they don't do it.

JIM LEHRER: Republicans said the Democrats want non-taxpayers to qualify for the $500 child tax credit.

REP. NEWT GINGRICH, Speaker of the House: Some of our Democratic friends would give much less money to taxpayers in order to transfer resources to people who pay no income tax. Now, that's welfare. And I think we ought to draw a clear distinction here. There is an appropriate place for welfare. There is an appropriate place for Pell Grants. There is an appropriate place for a variety of things to help people who do not pay taxes. But in a tax cut bill the focus ought to be on helping taxpayers.

JIM LEHRER: The Senate Committee is expected to dispose of some 150 amendments before a final vote on the bill late tonight. President Clinton came to Denver today for the annual summit of major industrial nations. This year the G-7 has become the summit of the eight, with the formal inclusion of Russia. The global economy, job creation, and NATO will be discussed during the three days of meetings. This afternoon the President spoke to a crowd outside a high-tech television facility. He said the American economy is the healthiest in a generation and the strongest in the world.

PRESIDENT CLINTON: In the four and a half years we've become the world's leading exporter. In the last two years over half the new jobs coming into this economy have paid above average wage, and we have the lowest unemployment rate in 24 years. Who could seriously argue that our effort to open markets with 200 trade agreements, the largest number in any period in American history is ill- advised. I say we should be doing more of it, not less of it. We ought to bare down and charge into the future and embrace the rest of the world.

JIM LEHRER: The summit officially begins tomorrow night and concludes Sunday. Paul Solman will preview the meeting later in the program tonight. In economic news today the Commerce Department reported the nation's foreign trade deficit rose 7.8 percent in April, reaching an all-time high of $8.4 billion. The report said there was a record deficit in trade with China. In Cambodia today there was a retraction of yesterday's claim that Khmer Rouge leader Pol Pot had surrendered. Co-prime minister Norodom Ranariddh said the one-time Communist ruler was still at large. He said most of Pol Pot's former comrades had deserted him and were now hunting him down. The prince said Pol Pot should be put on trial for the deaths of a million Cambodians during his reign of terror in the late 1970's. And that's it for the News Summary tonight. Now it's on to a major Supreme Court decision, a summit preview, news on estrogen, a Chicago hospice story, and a David Gergen dialogue. FOCUS - SUPREME COURT WATCH

JIM LEHRER: We go first tonight to the Supreme Court decision on majority black districts. The court upheld a Georgia plan which provides for only one such congressional district. More now from NewsHour regular Stuart Taylor of the American Lawyer and Legal Times. Stuart, first give us the story of the case, itself.

STUART TAYLOR, The American Lawyer: It really starts in about 1990, with the decennial census that led to redistricting all over the country and in Georgia, because of a population increase, they went from ten to eleven districts, voting districts for Congress. So they had to redraw the whole map. The state legislature under very heavy pressure from the Justice Department, which was--which was enforcing a legal interpretation of the Voting Rights Act that you have to maximize the number of minority majority districts, black majority and Hispanic majority districts, pushed the legislature to have three black majority districts in Georgia, which would be roughly proportionate to the 27 percent black population.

JIM LEHRER: In other words, that's how it looked. That's how the districts looked.

STUART TAYLOR: Yes.

JIM LEHRER: Okay.

STUART TAYLOR: And that was attacked by white voters and others who said that it was extreme racial gerrymandering, drawing weird shaped districts, some of them solely for the purpose of electing black representatives through race consciousness. And the Supreme Court in 1995--two years ago almost to the day--struck down that plan on the ground that at least one of the districts was an unconstitutional racial gerrymander. And they set in that case a test that if the predominant factor in the districting was race that it's unconstitutional and in violation of the 14th Amendment. It went back down to the lower court. They read the Supreme Court's decision and said that one of the other black districts was also unconstitutional, and they kicked it back to the legislature to redraw these districts. The legislature deadlocked. The House wanted two black districts; the Senate wanted one. So it went back to the court. The court drew a map with one black district only, and black voters, instead of--

JIM LEHRER: And this is the way it looks now, right? That's the one black district, the one that's light there on the--on the map, right?

STUART TAYLOR: The fifth, which is an urban area around Atlanta.

JIM LEHRER: Right.

STUART TAYLOR: And the Justice Department and civil rights groups said that's not enough. It violates the Voting Rights Act to have such small black representation. They're proceeding on the premise that blacks have a hard time getting elected unless there's a black majority in the district, and black voters have a hard time making their wishes felt. That went to the Supreme Court and the issue for the Supreme Court was whether one was too few. The Supreme Court said, no, one black district is enough. In fact, they suggested that it might be unconstitutional to have had two, as well as to have had three. The split wasthe same five/four split we've had in each of the last five years, in each June, I think, or around June; there's been another hammer blow at this movement to maximize the number of minority districts. The conservative majority of the court very narrowly--five/four in every case--same five every time, same four every time--keeps hammering it down and saying we don't want you trying too hard to create black districts, although they never said that it's unconstitutional to do it at all.

JIM LEHRER: Now, what is the--now, the four dissenters, what is their argument, and not only the dissenters, as represented on the court, but that argument, what is the argument for these minority districts?

STUART TAYLOR: Broadly speaking, the argument from the minority districts is that we have a long history in this country and particularly in the South and especially in Georgia, among other states in the South, of racially polarized voting and racial discrimination, so that white voters by and large vote for white candidates; black voters by and large vote for black candidates. If all the districts are white--which might happen in a lot of places or most of them because blacks are scattered around, they're 12, 13 percent of the population and they don't always tend to be concentrated--then blacks are going to have [a] a very hard time getting elected to office and [b], they're going--the black voters are going to have a hard time electing the representatives of their choice. That's their argument, and the Voting Rights Act to some extent embodies that argument and pushes for a creation of black districts where necessary.

JIM LEHRER: Now, specifically in Georgia, blacks make up 27 percent of the population, is that right?

STUART TAYLOR: Yes.

JIM LEHRER: And that was the argument too; that they deserve 27 percent of the congressional seats, is that basically it?

STUART TAYLOR: It comes close to being it. Basically, it--there isn't an argument really that everywhere it ought to be proportional, but there was an argument that in Georgia, given the difficulty blacks have historically had getting elected to office, you ought to push as close to proportional representation in the way districts are drawn as possible. Now, the last election has cast some doubt on those assumptions.

JIM LEHRER: Cynthia McKinney, who was--one of her districts was thrown out in this case, and then she had--she ran--well--

STUART TAYLOR: This was after the 1995 decision which the court knocked out--in the subsequent lower court--we're down to one black district in Georgia. And civil rights groups and the Justice Department tended to say blacks can't possibly get elected, you're going to purge Congress of black people. Well, guess what? All three black incumbents in Georgia won reelection, including Cynthia McKinney, who's a very liberal black representative, won reelection in a 33 percent black district. Now her--she and others have said, well, I never could have won but for the power of incumbency. But those election results, both in Georgia and elsewhere, became another arrow in the quiver of those who say we don't need racial gerrymandering for blacks to have a fair chance to get elected. And that's part of the argument. And the Supreme Court cited those facts.

JIM LEHRER: They did cite those facts. I was going to ask you that.

STUART TAYLOR: They did.

JIM LEHRER: They did cite them. Now, where does this decision today now lead this issue? Is it over?

STUART TAYLOR: It's not over because the court and in particular Justice O'Connor, who tends to bea bit on the fence on these things, still says that sometimes the Voting Rights Act may require deliberate efforts to create minority majority districts as a remedy for voting--racial block voting by whites and other things that keep blacks from getting fair representation. And there will still be--there's a lot of legal uncertainty, this huge legal confusion, because although the court keeps saying, no, too much of this is unconstitutional, there's also a strong argument that- -and sometimes you might get a majority in the court that not enough of it violates the Voting Rights Act.

JIM LEHRER: Okay. So, it's not over yet.

STUART TAYLOR: Not completely over, but certainly the pressure from the court is against race conscious redistricting.

JIM LEHRER: Stuart, thank you very much.

STUART TAYLOR: Thank you. FOCUS - ROLE MODEL

JIM LEHRER: Now, the annual economic summit which begins tomorrow in Denver. The U.S. is the host this year and perhaps an economic role model. Economics correspondent Paul Solman of WGBH-Boston reports.

PAUL SOLMAN: In Denver, Colorado, they've been preparing for an annual economic dance, the meeting of the so-called G or group of 7, where the world's major economies will again be cutting the rug. This year, the U.S., Canada, Japan, and the major European powers are joined by Russia, making it a summit of 8. Over the years, the aim of these summits has been to air out and smooth over national differences, to help lubricate world trade here over pre-summit cocktails. But during the dozen years I've reported on them the get-togethers have often been an occasion to bash the U.S. economy for its deficits, its downsizing, its loss of leadership to Japan.

SPOKESMAN: How many days you stay in Japan?

PAUL SOLMAN: This year, however, the U.S. free market model seems the one to emulate. And that's something of a surprise--even to the Treasury Department's Lawrence Summers.

LAWRENCE SUMMERS, Deputy Treasury Secretary: If some academic economists like me had predicted four and a half years ago that the United States would have 4.8 percent unemployment, 2 + percent inflation, real wages rising, inequality coming down, and the Dow at 7500, the assumption would have been that you were smoking something. And yet, that is exactly--

PAUL SOLMAN: To many observers, the U.S. economy is again number one. Take Germany. An economic powerhouse for years, it was a model of the welfare state. But now with unemployment near 13 percent, its government, like so many, is talking about more flexible U.S. type markets. The only major outlier, in fact, seems to be France. Though unemployment there is also around 13 percent, France has spurned the U.S. model and recently voted the socialists back into power with their plan for job creation via the public sector. So who's right? We decided to stage a debate with two non-experts who happen to both know Denver and the issues. Karl Schmidt is a German who makes recycling machinery here, exporting 30 percent of it. He came to this country with one suitcase back in 1968, age 23. He's added an asset or two in the years since. France's Christian Roche, by contrast, teaches French at the University of Colorado, plays classical guitar, lives simply, and deplores the U.S. economic model. We asked the Frenchman to take on the German in and around the summit's host city--starting at Schmidt's North Denver factory.

PAUL SOLMAN: Mr. Schmidt, what's better about being a businessman in the United States than in your native Germany?

KARL SCHMIDT, German Businessman: It's basically theflexibility you have and the competitive edge you have. Like in Germany, for instance, they get an average of 25 days' paid vacation.

PAUL SOLMAN: A year.

KARL SCHMIDT: A year. They get 17 paid holidays a year. We get about two weeks' vacation, two and a half weeks' vacation. We are much more competitive in this country, and that makes it easier on the flexibility also.

PAUL SOLMAN: By flexibility what do you mean?

KARL SCHMIDT: Flexibility is--what I mean by flexibility is really the--you can have a union, or you do not have to have a union.

PAUL SOLMAN: And you don't have one?

KARL SCHMIDT: I do not have a union.

PAUL SOLMAN: So you can fire people at will?

KARL SCHMIDT: Yes, correct.

PAUL SOLMAN: Flexibility. To Schmidt, it also means less government red tape in starting up a business like his, for instance. And it means fewer benefits. Schmidt says they cost an extra 35 to 50 percent of wages in the U.S. versus an extra 150 percent in Germany. So more flexible means cheaper. We asked Mr. Roche for his reaction.

CHRISTIAN ROCHE, French Professor: Well, I understand that all the advantages are on the side of Mr. Schmidt because from the point of view of the worker if I am in Europe I have more paid vacations, I have not--I'm not under your power like I am here. Here you can fire me. If I am there, I can negotiate with you.

PAUL SOLMAN: So you have no sympathy for his workers' position?

KARL SCHMIDT: We treat our workers better in the long run because we personally in our company, we have a profit sharing plan; we have a pension plan. We pay the family health insurance. We pay the family dental insurance. So we really do more for our workers than they do over there.

PAUL SOLMAN: So, Mr. Roche, he's saying, obviously, that in the long run it's better for the workers, I guess, being there's very high unemployment in Europe, for example, and very low unemployment here, so that your workers, getting this great deal, don't have very many jobs.

CHRISTIAN ROCHE: Yes, but you don't give up values that are part of your history and that are considered like civilization. Like what you are telling me, dental plans, health insurance, you are very proud, and I congratulate you that you give that to all your workers, except that if they are fired, they can go somewhere else where there is no Mr. Schmidt to protect them, and that's where in a political point of view I don't see exactly how it's better here.

KARL SCHMIDT: However, when it comes to that kind of situation it's relatively simple. You hold onto the best employees you've got.

PAUL SOLMAN: And what happens to the ones who are not so good?

KARL SCHMIDT: Is you lay 'em off.

PAUL SOLMAN: Schmidt says he's had to resort to layoffs twice over his 19 years as a boss; that he's fired only six to eight employees of the hundred or so he's hired over the years. Karl Schmidt's firm is making it in Colorado. And it's not alone. Denver's new airport is packing them in. Coor's Beer, once a cult brew, now exports to 35 countries. In fact, Colorado's very much part of the global economy, with state exports up more than 75 percent since the early 90's. So, high-tech firms are thriving here; construction is booming; and if you want to shop, try the new Park Meadows Mall.

PAUL SOLMAN: Mr. Schmidt, people also point to the U.S. economy as a model for the world in terms of what it provides to the consumer. Do you agree with that?

KARL SCHMIDT: I totally agree with you because you're limited in Germany to hours you can go shopping, and you're limited to all the choices you have. And there's much more open in this country, and, therefore, it's much easier on the consumer, therefore, you've got better consumers.

PAUL SOLMAN: Well, Mr. Roche, you've been a consumer in France for many years. How do you respond?

CHRISTIAN ROCHE: When I was in France, I didn't see myself as a consumer. When I'm here, I want to get out as fast as I can because it's like I am obliged to be a consumer. And the choice I have, I disagree, because here I only find the same things that have been successful because it's always the same thing every place.

PAUL SOLMAN: Every mall you mean.

CHRISTIAN ROCHE: Every mall is the same thing. I want to buy a book. It would be the best seller. And if they close the stores in Europe because they think there is something else in life other than consuming and selling. There is a family life and other values.

PAUL SOLMAN: But, Mr. Roche, in your country, 12.8 percent unemployment in France and in his country origin the same, Germany. Here in Denver, jobs go begging because there aren't enough workers for them. I mean, what are you going to do in France?

CHRISTIAN ROCHE: Either the French will become addicted consumers like here, and be happy to work around in this kind of very sterile environment, or they will find another way of expressing themself as total human beings sharing work, for example. There is not work for everybody.

PAUL SOLMAN: Shorter work weeks.

CHRISTIAN ROCHE: Shorter work week.

PAUL SOLMAN: What about that, Mr. Schmidt, why not shorten the work week, have people share the work, so that you have more jobs?

KARL SCHMIDT: Let's see. You would have to pay for 40 hours, and you only would get 32 hours' worth of work out of that employee, therefore, you're competitiveness would not be there. Why do you think that Mercedes Benz and BMW has built a factory over here?

PAUL SOLMAN: Because it's cheaper.

KARL SCHMIDT: Yes. It's more competitive.

PAUL SOLMAN: You get more out of the people, given the amount you pay?

KARL SCHMIDT: Correct.

PAUL SOLMAN: France's Mr. Roche had another critique of the mall; that its jobs were typical of the kind the U.S. creates.

CHRISTIAN ROCHE: These people are working very low wages. They cannot even afford all these things. You are selling a dream, the dream that you are working, you can buy everything. Mr. Schmidt can. I cannot, and the workers that are there cannot either.

PAUL SOLMAN: Indeed, even this upscale mall features low-wage jobs in abundance, and many of the products its sells, critics charge, are made by exploited foreign labor in places like China and Latin America. But while we were shooting in the mall, to illustrate Mr. Roche's point, Mr. Schmidt was waxing philosophical.

KARL SCHMIDT: But see the difference really is that the French live, work to live, so they only work enough to live.

CHRISTIAN ROCHE: Right.

KARL SCHMIDT: But the Germans and the Americans really live to work. We're here to get up, go higher, make more money. That's basically the whole thing in a nutshell; that the French enjoy life more. That's why they have four hours' worth of--four hours' of lunches.

PAUL SOLMAN: But ultimately, that means they're going to be poorer, is that what you're saying?

KARL SCHMIDT: Yes.

PAUL SOLMAN: Okay. Last stop. The Good Samaritan Homeless Shelter, which Mr. Roche felt spoke more eloquently than he could about the down side of the American economic model. Father Ed Judy ministers to the homeless here and supports Mr. Roche, saying that low income jobs just don't pay the rent. FATHER ED JUDY, Samaritan House: People have to work two jobs, or if they're married, both couples have to work and then they have problems of day care, and especially the ones that are on the bottom of the economic level.

PAUL SOLMAN: Music to your ears, Mr. Roche?

CHRISTIAN ROCHE: Exactly, because part of you is opening the description toward values that are beyond and transcending the consumer, I think, and when I think about the Park Meadow malls where we were. There were not as many lively conversations as in this place. This place people have real needs they are struggling with. In the Park Meadow they are more like ghosts, consuming without knowing why.

PAUL SOLMAN: Last word to you, Mr. Schmidt. Both of these guys are saying that capitalism in its American incarnation has devalued life, made it into pure consumerism and pure competition. No? Yes?

KARL SCHMIDT: I tell you what it is. It's up to the individual. I can go into the opera. I can have a family. It's really in America you can do what you feel inside is correct.

PAUL SOLMAN: America, land of the individual. It may not work for everyone, but at this year's economic summit the American model-- freer markets, weaker unions, less of a safety net--is the one they're all talking about because none of the seven other countries meeting in Denver is growing as fast, as stabily as the U.S.A..

JIM LEHRER: Still to come on the NewsHour tonight, new word on estrogen, a hospice story from Chicago, and a David Gergen dialogue. FOCUS - WEIGHING THE RISKS

JIM LEHRER: The estrogen story and to Margaret Warner.

MARGARET WARNER: Many women take estrogen for two or three years at the onset of menopause to ease its more uncomfortable symptoms. And there's little dispute in the medical community about the safety of that. But the long-term use of hormone replacement therapy, which is growing rapidly among older women, is far more controversial. Today, the "New England Journal of Medicine" released the most extensive study yet on the relationship between estrogen replacement therapy and mortality rate. The study compared nearly 700 post menopausal nurses who died over an 18-year period with a roughly equal number of nurses of similar age who lived. Here to explain the results is the study's chief author, Dr. Francine Grodstein, an epidemiologist at Brigham & Women's Hospital in Boston. She's joined by Dr. Nananda Col, a practicing physician an epidemiologist also at the New England Medical Center in Boston. Dr. Grodstein, first, what is estrogen? What does it do?

DR. FRANCINE GRODSTEIN, Brigham and Women's Hospital: Estrogen is a hormone which women produce naturally, primarily through their ovaries, during their reproductive years. At the menopause, which comes at an average age of 51 in the United States, women's ovaries stop producing estrogen.

MARGARET WARNER: And so what did your study find about the impact of taking estrogen after that period on the rates of death among women?

DR. FRANCINE GRODSTEIN: On the average we did find that the benefits of estrogen therapy appear to outweigh the risks. There was about a one third decrease in mortality rates for women who are taking estrogen.

MARGARET WARNER: But you did find also some significant differences, correct, in sort of length of time, for instance?

DR. FRANCINE GRODSTEIN: Right. More specifically, we looked at the duration of time that the women were using menopause estrogen and what the relation of estrogen duration to the balance of risk and benefits were. And we did find that while during the initial years of use, up to 10 years, the benefits outweighed the risks that--

MARGARET WARNER: That is fewer women died during that period if they were on estrogen than not?

DR. FRANCINE GRODSTEIN: Right. Now, after 10 years of continuous years, there still overall were benefits, but not the same extent as we had seen during the initial use--initial years.

MARGARET WARNER: And can you explain why?

DR. FRANCINE GRODSTEIN: The diminished benefits over time were primarily due to an increased risk of breast cancer mortality for women who were using hormones for ten or more years.

MARGARET WARNER: I see. Dr. Col, what's the meaning of this study, as you see it, for women, your patients, perhaps, who are trying to decide whether to go on estrogen therapy or stay on it?

DR. NANANDA COL, New England Medical Center: I think that this study again highlights the difference between short-term therapy and long-term hormone therapy. It confirms that short-term therapy, that is, therapy that's on the order of several years but say less than five years, appears to be a benefit without risk, if you're looking at life--at survival. However, when you are considering long-term hormone use, that is on the order of five to ten years, or longer, then you have to seriously weigh the risks and benefits. This study found that, on average, there was a 20 percent reduction in mortality for long-term hormone users, but that tells us again about an average woman, and we still need to be able to individualize this decision from an average to the woman who comes into your office.

MARGARET WARNER: Explain to me, Dr. Col, the science behind the fact that estrogen therapy is useful to someone who's at a high risk of heart disease but actually potentially dangerous for someone who's at a high risk of breast cancer.

DR. NANANDA COL: Yes. Estrogen has multiple effects on the body. Estrogen has been shown to decrease the risk of heart disease by nearly half, and it's also been shown to decrease the risk of osteoporosis. However, it has also been shown to increase the risk of breast cancer, so you basically have significant benefits, one significant risk. Now, how do you weigh those benefits with the risks? Well, it depends on what your risk of developing each of those diseases is to begin with. If you cut a very small risk in half, you don't gain much. On the other hand, if you cut a very large risk in half, you gain a lot. So what you need to do is for an individual woman is to determine what her starting--her base line risk for heart disease, breast cancer, and hip fracture is, then factor in the impact of hormone therapy into that equation. And if you do so, then you can come up with some--with a way of estimating what the long-term impact of estrogen therapy is on her life expectancy. Now, again, this only applies for long-term therapy, as Dr. Grodstein's study showed. The attenuation, the risks--the negative side of hormone therapy become significant after--the mortality side becomes significant after 10 years of therapy. The increased incidence, the chance of developing breast cancer, have been shown by Dr. Grodstein's previous study to become apparent after only five years of therapy. So it needs to be reconsidered. Long-term therapy needs to be reconsidered after five years of therapy.

MARGARET WARNER: Dr. Grodstein, would you agree with that assessment of sort of the meaning for patients of your study?

DR. FRANCINE GRODSTEIN: Yes, I do agree, and in particular I think what is important, as Dr. Col pointed out, is for each woman to think about her individual risks. We--we were able to separate our women into those who are at high risk of heart disease, meaning women who have--

MARGARET WARNER: Yes. Please explain that.

DR. FRANCINE GRODSTEIN: --women who have risk factors for heart disease.

MARGARET WARNER: Right.

DR. FRANCINE GRODSTEIN: That is women who are overweight; women who smoke cigarettes, who have high cholesterol, or high blood pressure. Things like these are known to increase your risk of heart disease. So for those women we saw significant mortality benefits. In contrast, when we looked only at women who had low risk of heart disease, meaning they had none of these risk factors, there were not very significant benefits.

MARGARET WARNER: But now skeptics would say there are other ways to lower those risk factors--overweight and smoking and so on-- other than taking a pill which might actually increase your risk of another disease, i.e., breast cancer.

DR. FRANCINE GRODSTEIN: Right. I think that's an extremely important point which is often looked over in the discussions of hormone use. I think one way to look at our finding that women who don't have risk factors for heart disease are not getting significant benefits is that if women can eliminate their risk factors, then they potentially don't need to be taking hormones to gain those mortality benefits. So we can tell women--and I think we should be telling women--that hormones are one option among many lifestyle options that are available to them to reduce their risk of heart disease, as well as osteoporosis. And if we can encourage women to exercise, to lose weight, to stop smoking, to maintain a healthy diet, those things will give them only benefits.

MARGARET WARNER: Now, Dr. Col, many women, though, take estrogen, I gather, for reasons other than having to do with mortality. I mean, there are quality of life issues.

DR. NANANDA COL: Exactly. There are as many different reasons for taking hormone therapy as there are different kinds of women. Estrogen therapy has so many different effects on your body, on the way that you feel, on the way that you look, on the way that you think that you look. Many women do take it for a variety of different reasons, and it's very important to let--to understand why the patient is interested in taking hormone therapy. Many women would like to take it because of the way it makes them feel. They perceive that their memory is improved. They perceive that their mood is improved on it. And such women are looking for reassurance that by taking hormone therapy that it won't be compromising their life expectancy to any significant extent. On the other hand, there are women who don't feel good taking estrogen, and those women would only be interested in taking it if they could--if they were expecting a significant mortality benefit from it, so it runs the full gamut.

MARGARET WARNER: And Dr. Grodstein, do you think that estrogen replacement therapy is being oversold at all to women?

DR. FRANCINE GRODSTEIN: It's actually a very difficult question to answer. I think it's important for women to keep in mind that this is a personal decision and the balance of risks and benefits are going to depend on the individual woman, not just--we've been talking about mortality benefits and how women can lower their risk of heart disease using estrogen, as well as other things, but there are many other considerations. And I think women should understand all of their options and should be able to make informed decisions, which are also just based on their personal preferences.

MARGARET WARNER: All right. Well, Dr. Grodstein and Dr. Col, thank you both very much.

DR. NANANDA COL: Thank you.

DR. FRANCINE GRODSTEIN: Thank you. FOCUS - HOSPICE FRAUD?

JIM LEHRER: Now, another in our continuing series of reports on the changing health care system in America. Federal investigators have been looking into charges of fraud at hospices across the country. Hospice operators say it's unfair. Elizabeth Brackett of WTTW-Chicago reports.

SPOKESPERSON: Hi, Bill. How are you today?

ELIZABETH BRACKETT: It's hard to predict how much time 87 year old Billy Whitaker has left. Once a Virginia coal miner, Whitaker has suffered from Black Lung Disease for years. Last January, he was certified for hospice care. His daughter says she couldn't manage his care without the help of a hospice staff.

WHITAKER'S DAUGHTER: I could never do it by myself, really, especially with his bath and personal things.

ELIZABETH BRACKETT: Before being admitted to hospice care and before Medicare will pick up the cost, a patient must be diagnosed as having less than six months to live. Patients must agree to give up all curative medical care. Hospice care consists of pain management and helping patients and their families face the upcoming death. Medicare began paying for hospice care in 1983. Since then, the number of patients has jumped from around 100,000 to nearly 400,000.

SPOKESPERSON: People ask us a lot of times how can you do that job, or why do you like that job, but we just--we have a group of individuals that, you know, they really love the work, the support of the families. You know, we meet so many nice people, and when we can walk away and know that we've made a difference in the way that the end of that loved one's life came to an end, you know, when we see that, it's just--it's very rewarding, and that they aren't in pain.

ELIZABETH BRACKETT: But now Hospice Nurse Theresa Gobelli has more than her patients to worry about. Her hospice, the Visiting Nurses Association Hospice, in Rockford, Illinois, is under federal investigation for Medicare abuse. The problem: Patients who are diagnosed with a terminal illness but live longer than seven months. Federal investigators say they found the first evidence of such fraud in Puerto Rico. The investigation is being run by the Inspector General's Office and the Department of Health & Human Services. Inspector General June Gibbs Brown spoke with NewsHour reporter Murray Jacobson.

JUNE GIBBS-BROWN, Inspector General: Well, we found a high percentage of people that were being entered into the hospice program, and they didn't have an ailment that they would expect not to live more than six months. Actually, when we dove into it and found that certain of the providers were abusing the program, and we decertified 30 of them.

ELIZABETH BRACKETT: After Puerto Rico, a nationwide fraud investigation called Operation Restore Trust was begun. Twelve hospices in five states--Florida, California, Texas, New York, and Illinois--were audited. The audit found that in cases where patients lived longer than seven months 2/3 of the records did not justify a terminally ill diagnosis, therefore, the patients should not have been certified for hospice care. As a result, the hospices are being asked to pay back 83 million dollars in Medicare payments.

JUNE GIBBS-BROWN: We have had medical people review records, particularly where somebody has some organization, had a very, very high percentage of people who were still living after seven months, and we found that of those that were living after seven months in these what I might call problematic providers, that about 2/3 of them had chronic, rather than some type of terminal illness.

ELIZABETH BRACKETT: Surveyors from the Health Care Finance Authority, which cooperated with Operation Restore Trust, inspected the medical records at the Rockford Visiting Nurses Association in August. Hospice President Susan Schreier says the records of their 15 Medicare patients were looked at. She was told the records of eight patients did not indicate a terminal illness and three other cases were questionable.

SUSAN SCHREIER, Hospice President: We were just appalled because, of course, we work with physicians to determine that people are terminally ill before they are provided the hospice care. The primary care physician, who has been working with the patient usually on a very long-term basis, has sometimes known the patient and family for years before they've had a terminal diagnosis says to us, yes, we believe this person is terminally ill, has less than six months to live, and we also have all of our cases presented to our hospice medical director, who also says, yes, this person is terminally ill.

DR. KRISHNA SANKARAN, Hospice Medical Director: Clearly, this is someone with a very advanced disease doing poorly who we really did expect to die fairly soon. I'm glad we were able to provide him with appropriate comfort care measures.

ELIZABETH BRACKETT: The hospice's medical director took another look at the records the federal surveyors questioned. He says he would still certify all of the patients for hospice care today. His hospice has not been asked to return any Medicare funds, but Dr. Krishna Sankaran says he worries about the impact of the investigation on the hospice.

DR. KRISHNA SANKARAN: We are talking about a situation where clearly there is judgment involved. There's no absolutes; there's no rules that fit perfectly; and you have to make some assessments which--which may have some differences in time frame and people's expected survival. I think holding to rules and holding people accountable for those types of differences that can't be reasonably gauged will basically deny those patients care.

ELIZABETH BRACKETT: Dr. Steven Rothschild is the former medical director of a large Chicago hospice. He says it may be easy for federal auditors to look at medical records in hindsight and decide that patients who took longer than six months to die should not have been certified for hospice care. It's a lot harder, he says, to predict up front when a patient will die.

DR. STEVEN ROTHSCHILD, Former Hospice Medical Director: It is extremely difficult to predict when patients are going to die. This idea that we all have from movies of you have three months to live, the doctor walking into the room--I always think of Betty Davis in "Dark Victory"--doesn't exist. It does not exist. We're able to predict within a few hours in most cases but all of us have seen patients went home with a prognosis of a few days who have lived months. It is extremely difficult.

JUNE GIBBS-BROWN: Of course, the practice of medicine is an art and it's a very difficult thing to know exactly when a patient will expire. And we're not trying to say that this is an exact science. I think one of the important factors here is we're very concerned about the patients. Some patients need curative care. Once they go into hospice they're getting palliative care, which is only things to make them more comfortable. And if they aren't given the care they need, it could jeopardize that patient's life span. Also, once they have gone out of hospice they can't re-enter for the same illness, if it's over six--the seven month period.

DOCTOR TALKING TO PATIENT: Do the medicines help your pain?

ELIZABETH BRACKETT: Dr. Michael Preodo founded the Horizon Hospice in Chicago 19 years ago. He says the real problem in the hospice movement is not that patients are living too long; it's that they are not being referred soon enough. A University of Chicago study found that 50 percent of all hospice patients die within a month and 15 percent die within a week of referral. Dr. Preodo blames some of the late referrals on Operation Restore Trust.

DR. MICHAEL PREODO, Hospice Doctor: Operation Restore Trust has led us to be very apprehensive about taking people into our program where the prognosis is not clear. There are many illnesses where prognosticating is difficult, if not impossible, where the needs for the patient and family are entirely palliative. But we're unable to take those patients if we can't be sure they're going to die in the six month allotted time.

ELIZABETH BRACKETT: Louise Uschlog is one of those patients. The 86 year old woman lives alone, had surgery for stomach cancer last year, and Dr. Preodo would like to certify her for hospice care, but Operation Restore Trust has made him reluctant to make the referral.

DR. MICHAEL PREODO: When we look at Mrs. Uschlog, she has had a serious malignancy. She's also had a decline in her general functional status. She's lost weight, though she hasn't quite lost a third of her body mass. She meets a few of the criteria which make it likely that she would be hospice appropriate; however, does she meet enough of those criteria, and what do we do as a hospice program if she functions at exactly this same level nine, twelve months from now. Are we then in jeopardy for having charged Medicare for services that they don't feel are justified?

ELIZABETH BRACKETT: Congressman Bill Thomas chairs the congressional subcommittee that oversees Medicare. He says the results of Operation Restore Trust show that too often doctors make the wrong decision when they refer patients for hospice care.

REP. BILL THOMAS, [R] California: The problem is the way in which the program is currently being conducted is simply unacceptable if the levels of fraud and abuse that I believe are there and are being documented are there. It isn't that you would stop the hospice program. You would make sure that you have a decision-making structure that won't allow for those abuses, and we believe we have legislation that would correct it.

ELIZABETH BRACKETT: Currently, hospice patients are re-certified after three months, six months, and seven months of care. After that, patients can remain under hospice care indefinitely. Congressman Thomas says that's where much of the abuse has occurred. His legislation proposes frequent eligibility checks for patients who live longer than seven months. Most hospice workers do not object to more frequent eligibility checks. What they do object to is the assumption that there is widespread fraud in the industry based on Operation Restore Trust's findings in only 12 hospices.

SUSAN SCHREIER: My reaction is that they're looking for fraud and abuse that really doesn't exist. And they're not quite sure how to go about doing it because hospice has grown rapidly; they think that there is fraud and abuse, and I just--I don't feel that that's the case. I think that our society is searching this kind of compassionate care, and that as a society we have not dealt with the issues of death and dying and that this a service that is dealing with the issues. And every one of us has to go through this process and many times with our family members, and I believe that, you know, we really need to assist people so that they can receive the compassionate care they need.

ELIZABETH BRACKETT: But the inspector general's office says there is enough concern to warrant expanding Operation Restore Trust. In addition to hospices, the investigation has already looked for fraudulent Medicare payments to nursing homes, home health agencies, and medical equipment suppliers. Eventually, Operation Restore Trust is expected to expand to all 50 states. DIALOGUE

JIM LEHRER: Finally tonight, a Gergen dialogue. David Gergen, editor at large of U.S. News & World Report, engages Leonard Garment, former Nixon White House counsel, author of "Crazy Rhythm: My Journey from Brooklyn, Jazz, and Wall Street to Nixon's White House, Watergate, and Beyond."

DAVID GERGEN: In preparing this book of memoirs, Len, you went back and took a hard look at events 25 years ago, and the great mysteries of the Nixon presidency, and found a direct connection between decisions he made early on about Vietnam and Watergate. Tell us about all of that.

LEONARD GARMENT, Author, "Crazy Rhythm": Well, the first decision that President Nixon and Henry Kissinger had to make when Nixon became President, the first major decision, was what to do about Vietnam. Nixon and Kissinger decided--felt that they had no alternative but to withdraw slowly from Vietnam.

DAVID GERGEN: As opposed to a quick withdrawal.

LEONARD GARMENT: They couldn't just pull out--that was their view--because it would have pulled the cork out of a bottle--that was one of Nixon's favorite statements--evocative of the situation; that our allies in Asia, that the Chinese with whom secret negotiations were planned--the Russians with whom detente was being formulated--would all say this--this is a paper country run by a paper president. Nixon and Kissinger really had to bite their lips and do it gradually. The strategic withdrawal was bombarded domestically, was bombarded by people who thought the war was wrong; that we should end our engagement. It was bombarded by very anxious students who were afraid that they'd be drafted and be sent to Vietnam. It was bombarded by the press, many who had been in Vietnam and hated what they saw there. Nixon and Kissinger had to hold on through Kent State, through Jackson State, through the mobilization against the war. And by 1970, they pretty much had that under control. The summer of 1970, after the invasion of Cambodia, miraculously the country suddenly turned quiet. It had vented the spleen against Nixon. I think they were convinced that we were getting out. The draft was ended or was in the process of being ended. Student troops that were sniping at this great withdrawal were no longer anxious about their being involved, and then Elsberg came along in 1971, spring of 1971.

DAVID GERGEN: I should say parenthetically, by the way, for the interest of full disclosure, that I also joined the Nixon administration and was working with you during this time, so I--

LEONARD GARMENT: And you look familiar. [laughing]

DAVID GERGEN: So tell us about Daniel Elsberg then.

LEONARD GARMENT: David, one of my favorites. So you'll go easy on me for the balance of this interview. Elsberg--huge dump of papers in the spring of 1971.

DAVID GERGEN: The Pentagon Papers.

LEONARD GARMENT: Pentagon Papers. Secret, top secret, classified, super eyes only, what have you--and it involved the revelations with respect to Kennedy and Johnson administrations, not Nixon. But Henry Kissinger and Richard Nixon felt--and with-- with pretty good reason--that this would have a very negative effect; that they couldn't keep secrets; and I think while Nixon wanted to protect the withdrawal from Vietnam, he was in a real rage at Elsberg and at the New York Times and at the Washington Post for disclosing the secret material--went to court, lost in the Supreme Court--then, as a result of that, he asked that the White House staff create a unit that would--that would plug leaks of this sort, and that was the birth of the plumbers. And the plumbers included Gordon Liddy, the genius of bravery we saw later on, if not discretion, and Howard Hunt, whose whole life was in a sense fictional in that he wrote forty or fifty spy novels and he lived that kind of life, and they with the Cubans went off on various missions to carry out the President's will under the general direction of Field Marshal Colson. That included political intelligence activities and then of course it led straight to the break-in at Watergate.

DAVID GERGEN: So you have a plumbers unit that was set up essentially for national security purposes, originally, which took on--took on political coloration--

LEONARD GARMENT: Because it--the timing merged with the-- with the 1972 election planning. And in '71, the fall of '71, Richard Nixon and Henry Kissinger, who were working out their- -their vast triple play involving the Soviet Union and China and North Vietnam, one played against the other--were not paying that much attention to politics and suddenly the polls showed that Richard Nixon was in a dead heat with Muskie, so that led to the instructions to get out every piece of political intelligence, to find out what they could about the Democrats, to find out what they could, and do things to Muskie and then Nixon went off to carry out his foreign policy activities, certainly with at least the constructive if not the actual knowledge in general terms of what Colson and his plumbers were doing.

DAVID GERGEN: And that's what got him into Watergate.

LEONARD GARMENT: And that's what got him into Watergate.

DAVID GERGEN: They went in--

LEONARD GARMENT: And they never got out of Watergate.

DAVID GERGEN: But they went in in Watergate what, in May?

LEONARD GARMENT: They went in three times in May--on one weekend--finally we're distant enough from the events that we can- -there are a few things about it that are--that are fairly humorous. The plumbers or the burglars went into Watergate--they went in--they actually went in, they came out, they went in. There were three entries, I believe, on this--during this weekend, where they planted the bug in Democratic headquarters. And why did they go that many times? Well, when they first went in, one of the--one of the plumbers--I think it was Bernard Baker--had forgotten a crucial tool that was needed to open the door. So they said, Bernie, where's that tool, and he said, well, I left it home, and they said, where is home, and he said, it's in Miami. They said get on the airplane and go back. So he flew down and he picked up the tool and came back, they did it again; they had some other problems; and finally they planted the bug and, as we know, in the next two weeks they had a problem with its--its operational capacity, and that led to the June 17th adventure which I think the Democrats were fully primed for by then.

DAVID GERGEN: Your general view then is a decision early on about Vietnam, instead of getting out quickly, which they didn't want to dofor foreign policy reasons, to get out slowly, may have worked on the foreign policy terms but it invited this domestic uproar.

LEONARD GARMENT: Right. Nixon--

DAVID GERGEN: And then led to Watergate.

LEONARD GARMENT: In the mixture of intellectual anxiety about his whole withdrawal plan and personal emotional rage that the fellow, Daniel Elsberg, would invoke his power as an individual to just--to break the law--in Nixon's view--and that led to the plumbers--that led straight line--so this is the spine that really connects the presidency from beginning to end, another casualty of Vietnam that has bee said, and the spine was broken in the end by Nixon's impeachment and resignation.

DAVID GERGEN: Well, Leonard Garment, thank you very much.

LEONARD GARMENT: Thank you. RECAP

JIM LEHRER: Again, the major stories of this Thursday, the U.S. Supreme Court upheld a congressional remapping plan that provides only one black majority district in Georgia, and President Clinton said in Denver the U.S. economy is the envy of the world. He was there for the start of the economic summit tomorrow. We'll see you online and again here tomorrow evening with Shields and Gigot, among others. I'm Jim Lehrer. Thank you and good night.