The MacNeil/Lehrer NewsHour

MR. MUDD: Good evening. I'm Roger Mudd in New York.

MS. WARNER: And I'm Margaret Warner in Washington. After the News Summary, we update the political turmoil in Moscow, preview President Clinton's health care speech, look at one city's remedy, and have a Charlayne Hunter-Gault conversation with journalist Michael O'Neill. NEWS SUMMARY

MR. MUDD: At least 40 people were killed this morning when an Amtrak passenger train, the Sunset Limited, derailed on a bridge at Saraland, Alabama, just north of Mobile. All three engines and four of the eight cars left the rail just after 3 AM local time. Two of the passenger cars plunged into the bayou, and one of them was totally submerged. Rescue efforts were hampered by darkness, fall, murky water, and some said alligators. Officials said the Sunset Limited traveling from Los Angeles to Miami carried 189 passengers and 17 crew members. Coast Guard officials say 13 people are still unaccounted for. In Washington this afternoon, an Amtrak spokesman held a news conference.

CLIFFORD BLACK, Amtrak Spokesman: There really couldn't have been a worse combination of events. We have a derailment, an emersion in water, fire. This is, without doubt, the worst tragedy to -- that Amtrak has suffered in its 23 history. It is conceivable that today's catastrophic accident could equal or eclipse the entire fatality rate for our entire 23-year history.

MR. MUDD: The cause of the accident is not known. A freight train, reportedly, had earlier crossed the bridge without incident. Officials from CSX Transportation, which owns the track, and the National Transportation Safety Board will investigate. Margaret.

MS. WARNER: Boris Yeltsin appeared to have a clear edge today in his struggle with hard-line opponents. The streets of Moscow remained calm as Yeltsin ventured out to greet supporters. He vowed not to use force to overcome his opposition. Yeltsin dissolved the conservative Russian parliament yesterday and ordered new parliamentary elections in December. The parliament responded by swearing in a rival acting president, Alexander Rutskoi, who addressed his supporters at the parliament building today. Western leaders, meanwhile, rallied around Yeltsin, saying he had no alternative but to break the deadlock between himself and the Communist era parliament. President Clinton expressed his support for Yeltsin again today. Mr. Clinton also said he was hopeful the situation would remain calm. A second passenger jet was shot down in the former Soviet republic of Georgia. Up to 100 people were reportedly aboard the plane, which was hit after landing at Sukhumi, the capital of a breakaway region in Georgia. It was not clear how many may have survived the attack. Twenty- eight people were killed yesterday when another passenger jet was shot down into the Black Sea near the same city. Georgian officials blamed both attacks on rebels fighting for independence for their breakaway region.

MR. MUDD: President Clinton delivers his long-awaited, long delayed health care reform speech tonight before a joint session of the Congress. He and Vice President Gore and Mrs. Clinton briefed congressional leaders from both parties at the White House this morning. Reporters asked the President why he thought his plan would succeed where past attempts had failed.

PRESIDENT CLINTON: There is almost unanimous consensus that the cost of continuing on the present course is greater than the cost of change. With health care costs rising at more than twice the rate of inflation and rising much faster than that for small businesses, with many people -- more people losing their coverage every month so that we're paying more for less health care, with the range of choices available to Americans dropping dramatically and the administrative costs of the system escalating at a breathtaking rate, that the cost of going on is greater than the cost of change. I don't think that there's ever been that much consensus before.

MR. MUDD: Republican leaders have pledged their cooperation, but after today's meeting, GOP Senators and representatives spoke in differing tones about bipartisanship.

SEN. ROBERT DOLE, Minority Leader: I have indicated to the President and Mrs. Clinton a number of times we're going into this on our side, at least as many people as I can convince, in a very positive way. My view is that this is a good beginning. It's going to be a long path before we have final passage, and I really believe that in the past in most health care areas we could have bipartisanship.

REP. RICHARD ARMEY, [R] Texas: The President said in his inaugural address that the best way to fix what's wrong with America is to use what's right with America. He's applied just the opposite of that principle in his response to health care. Any American citizen thinks that they will be made better off in their health care security by a government-mismanaged program of this magnitude I think is going to be badly misguided. Again, I could not be more disappointed.

MR. MUDD: The President speaks to the Congress at 9 PM Eastern Time, and we'll have more on health care later in the program. Also today, Mr. Clinton said the federal government would pay for 90 percent of the cost of the summer's Midwest floods, instead of the usual 75 percent. Flood damage in the nine states totaled $7.6 billion. In a written statement, the President said the floods had shown that natural disasters can affect the entire nation's economy.

MS. WARNER: Gen. John Shalikashvili, President Clinton's nominee to the Chairman of the Joint Chiefs of Staff, told the Senate Armed Services Committee today that he didn't learn of his father's World War II Nazi affiliation until last month. After Mr. Clinton named him to the post, reports surfaced that his father had served in Nazi Germany's Vofen SS.

GEN. JOHN SHALIKASHVILI, Chairman, Joint Chiefs of Staff- designate: It is most troublesome to me that according to his own writings apparently in the last months of the war, my father was associated with some Georgian unit that was under the control of the Vofen SS. I am deeply saddened that my father had this tragic association. To me -- and I believe to all those who knew him -- that is so absolutely out of character. To me, he was a kind and gentle man, and I loved him very much. He was a man who perhaps loved his native Georgia too much, certainly a man caught up in the awful tragedy of World War II.

MS. WARNER: Senators said the general's family wouldn't derail his nomination. Meanwhile, Actress Jane Alexander became her confirmation hearings today to be chairwoman of the National Endowment for the Arts. Alexander told the committee she would follow the statutory guidelines to ensure that grants are given to the highest degree of artistic merit and excellence, but she said she could not promise that the NEA would be free from controversy.

MR. MUDD: Jon Demjanjuk, the man cleared by Israel of being Nazi Death Camp Guard "Ivan the Terrible," returned to Ohio today and went into seclusion. The 73-year-old former auto worker stopped in New York early this morning, where he was transferred from an Israeli airliner to a plane chartered by his family. Demjanjuk spent more than seven years in an Israeli jail. The country's Supreme Court threw out his conviction in July and then rejected requests for a new trial this week. U.S. Attorney General Janet Reno has said she will move to deport him.

MS. WARNER: The shuttle Discovery landed safely today in the pre- dawn darkness at Florida's Kennedy Space Center. It was the first ever nighttime landing at a space facility. NASA officials said the 10-day mission was nearly flawless. The five astronauts tested tools and techniques that a second crew will use to try to fix the Hubble Space Telescope in December. That ends our News Summary. Ahead on the NewsHour, the standoff in Moscow, the Clinton health care speech, one city's health care solution, and a Charlayne Hunter-Gault conversation. UPDATE - STANDOFF

MR. MUDD: We go first tonight to an update on the political crisis and standoff in Russia. Russia now has two men claiming to be president, and depending on which president you ask, has either one parliament or no parliament at all. But Boris Yeltsin seems to have held onto some key levers of support. Our update comes from Correspondent Ian Williams of Independent Television News.

MR. WILLIAMS: They surrounded the White House today, hard-line demonstrators behind their hastily erected barricades voicing their anger at President Yeltsin and their support for the deputies inside. But this was not the mass expression of popular outrage the Russian parliament had called for. No more than a few hundred turned up, greeting with cheers parliament's new threats against Yeltsin andhis government. The police kept their distance, the building guarded by a group of men in plain clothes. They were uneasy and suspicious, frog marching a Russian cameraman away after he appeared not to cooperate with them. Inside, more of these irregular guards, Kalashnikov rifles slung over their shoulders, clearly not convinced by Yeltsin's assurance today that he will not use force to solve the crisis. Three floors above the two men seeking to rest power away from Yeltsin. Parliamentary Speaker Ruslan Khasbulatov and the man appointed by parliament as acting president, Alexander Rutskoi. We asked Mr. Khasbulatov what he thought of the president's latest actions.

RUSLAN KHASBULATOV, Chairman, Russian Parliament: [speaking through interpreter] The president, you mean Rutskoi, well, I'm sure this president will do everything in his power to normalize the situation.

MR. WILLIAMS: And how confident was he that his president would win the power struggle?

RUSLAN KHASBULATOV: [speaking through interpreter] The Russian people are already supporting us. This disgrace can't possibly go on for a long time. There has to be an end to it one way or another.

MR. WILLIAMS: And Afghan war veteran, Mr. Rutskoi, likened the struggle for power not to a battle but to a chess match.

ALEXANDER RUTSKOI, Russian Vice President: [speaking through interpreter] I'm a pragmatic person. I'm always calculating. And if were to call this a chess match and look two or three steps ahead, we'd see that Yeltsin is in danger of a checkmate, one or two moves and checkmate.

MR. WILLIAMS: One move today for control of the media. Parliament, its long distance telephones cut by the president, demanded Rutskoi sack the pro-Yeltsin head of state controlled television and appoint his own man. News bulletins have carried heavy coverage of the president's decree. They have certainly been sympathetic to him though have also carried statements from his opponents. The main television station is under heavy police protection and remains in Yeltsin's hands.

ALEXANDER RUTSKOI: [speaking through interpreter] The media is in the hands of the President's clique, if I may call it such. The armed forces have been used to put radio and TV under heavy guard. So what sort of democracy is this?

MR. WILLIAMS: Most Russian newspapers, which now represent a diverse range of opinions, have yet to comment in detail on Yeltsin's decree, as last night's broadcasts came too late for them. Another target of both sides, the defense ministry. Last night, Rutskoi appointed his own defense and interior ministers, but they have yet to get near their respective ministries. Today, Yeltsin's defense minister, Havel Grachov, was meeting his generals, a routine affair, he said. He also says the armed forces would not become involved in any political actions, though they fully support Boris Yeltsin, a statement of loyalty echoed by Russia's interior minister. There was extra security around public buildings today, but no sign of any troop deployment. Parliament also ordered the country's central bank to stop funding the presidential apparatus. Its leadership is conservative, but there is no sign of them complying. And throughout Russian industry, workers' content about reform have been growing. Workers were reluctant to heed Khasbulatov's call to strike against Yeltsin. This afternoon, the president appeared in public for the first time since his announcement on a walk-about in Pushkin Square in the heart of Moscow. He was, as always, brimming with confidence. "There will be no negotiations with parliament because parliament doesn't exist anymore," he declared. Buoyed by the news that so far at least the armed forces have pledged their allegiance to him, he told the people around him, "There will be no blood on the streets," while Russia's other president appeared on the balcony of the White House this evening to address a gathering of his supporters, which by now have swollen to several thousand. Here at the White House tonight and among Yeltsin's supporters, there is a growing realization that the outcome of this bitter struggle may not lie here in Moscow but in the regions. Both sides have been courting local leaders, and both are fearful that independence- minded republics and regions may not take sides at all. Instead, they may ignore central authority completely. FOCUS - CLINTON'S CURE

MS. WARNER: Next tonight, the Clinton health care plan. Later this evening, the President will formally present his national health care plan to a joint session of Congress. The long-heralded plan is at the heart of the President's domestic policy. At stake is the reorganization of a $1 trillion industry that accounts for one-seventh of the national economy. We begin now with a Kwame Holman backgrounder.

MR. HOLMAN: If any doubted that health care would be a hot political issue in the '90s, Harris Wofford probably made believers out of them.

GROUP OF PEOPLE: [shouting] Wofford! Wofford!

MR. HOLMAN: During his 1991 campaign for a Pennsylvania Senate seat, Wofford hammered away at the issue. He said people who lose their jobs shouldn't lose their medical coverage as well. Apparently, the voters agreed and swept Wofford to an upset victory over Attorney General and former Pennsylvania Governor Richard Thornburgh.

HARRIS WOFFORD: [speaking to group] We want national health insurance, and we want it now!

MR. HOLMAN: It was Wofford's political strategist, James Carville, who recognized the importance of health care to the campaign, and when Carville moved on to Bill Clinton's presidential campaign, so did the health care issue.

BILL CLINTON: [first speech segment] A health care program that will provide affordable health care to all Americans but not by beginning with a huge tax increase.

BILL CLINTON: [second speech segment] By asking the wealthy to pay their fair share, and controlling health care costs where the waste is most flagrant among insurance companies and drug companies and bureaucracies.

BILL CLINTON: [third speech segment] We can keep what is best about our system, the right to choose your doctor, your hospital, your provider. We can keep the whole thing private, including insurance.

BILL CLINTON: [fourth speech segment] And we must require people not to be denied access to health coverage because of preexisting conditions. [applause]

MR. HOLMAN: Candidate Clinton vowed to make health care reform the No. 1 priority of his administration. And shortly after he was sworn in to office, President Clinton underscored his campaign pledge by appointing First Lady Hillary to head the White House task force on health care reform.

PRESIDENT CLINTON: I think that in the coming months the American people will learn, as the people of our state did, that we have a First Lady of many talents but who, most of all, can bring people together around complex and difficult issues to hammer out consensus and get things done.

MR. HOLMAN: In the weeks and months that followed, Hillary Rodham Clinton held a number of high profile town meetings and health care forums. She invited health care professionals, as well as everyday Americans, to give their opinions and advice on what needed to be contained in any health care reform package.

HILLARY CLINTON: Many of the problems that were pointed out that we could all agree on, that we don't have enough primary care practitioners to do the kind of work that we heard about from the doctor in the audience and the doctor in the panel. Well, how do we get quickly to reverse the ratio of 70 percent specialists to 30 percent generalists? I don't know that it is possible to satisfy every need that was heard today. I think the best we can do is to be honest about facing the problems that every one of us in this room have had a hand in helping to create.

SPOKESMAN: Mr. Speaker, the President of the United States.

MR. HOLMAN: Tonight, will be President Clinton's second address to a joint session of Congress. He's expected to lay out the principles of health care reform he wants met, including health security for all, simplifying the health care system, making sure everybody pays a fair share, and achieving savings through cost containment, while maintaining choice and the quality of care. And what the President does not want is the kind of partisan battle that ensued after his first speech to Congress on the budget. Mrs. Clinton has kept closely in touch with members of Congress from both parties, and it appears a bipartisan spirit is there.

REP. ROBERT MICHEL, Minority Leader: I really feel that on this issue, one that has all kinds of interest among the American people out there, that we can definitely work together, and there are a number of options for us to consider.

MR. HOLMAN: One of those options was offered by Senate Minority Leader Bob Dole.

SENATOR BOB DOLE, Minority Leader: Fundamentally, we believe that if you give business men and women and individuals the tools they need to gain access to reasonably priced health care coverage, they will take that opportunity, absent massive government intervention or mandates.

MR. HOLMAN: As the President prepared this afternoon to deliver tonight's address, it was with the knowledge that no matter what specifics he presents, the details of health care reform will be worked out by Congress.

MS. WARNER: Now, two officials who've dealt with health issues in previous administrations. Dr. Bernadine Healy was director of the National Institutes of Health under President Bush. She's currently seeking the Republican nomination for the U.S. Senate for Ohio. Joseph Califano was Secretary of Health, Education, & Welfare under President Carter. He also served as chief domestic adviser to President Johnson. Welcome to both of you. Let me start with you, Mr. Califano. What does the President have to do tonight? What's the most important case he has to make?

MR. CALIFANO: Well, I think the case is made for health care reform. What he's got to do is really give a speech that keeps this subject on the front burner. I think the President's role is to arouse the people to a call to arms. The bill is going to be written in Congress. The details of this bill will be written in Congress. And I think he's done it brilliantly so far. And I think he's played on the greatest concern of the American people. Most American people have health care, but they're all worried about losing it when they lose their jobs. With thousands of layoffs in the past couple of years, with business, big business angry that other big business isn't covering their employees, he's played on all of that very well. And I think the people are ready to reform.

MS. WARNER: Do you agree, Dr. Healy?

DR. HEALY: I think the most important thing he should do tonight is to make sense and not to incite fear. I think fear has been a driving force in this debate, and I don't think it's a healthy one. I think facts, not fear, should dominate, and facts have to be surrounded -- surrounding the issues, affordability, coverage of those 37 million who are not covered, and some recognition of the fact that over 200 million Americans are getting good care and don't necessarily have to have their whole care disassembled in order to help the 37 million who do need coverage.

MS. WARNER: Well, Mr. Califano, where do you think the President starts at with the public? That is, the polls seem quite contradictory. 99 percent of the people say they like their own health care, but 90 percent of the people tell the New York Times they want the system drastically overhauled.

MR. CALIFANO: Well, I think most of the people love health care, and they love not paying for it. And they feel like they're not paying for it. I think, where does he start? He starts where Richard Nixon arrived, where Jimmy Carter and I arrived. When I started looking at health care on a search of HEW, I was all -- I started with the viewpoint of a national plan, with the federal government running it. But the reality is that every nation in the world that covers all their people, we're the only industrialized nation besides South Africa that doesn't, every nation did it out of their existing health care system. So he starts with the employer mandate. Like it or not, the reality is that most Americans get their health care from their employment relationship. And there, I think, we ought to treat it like the minimum wage. Minimum health care benefits like a minimum wage, like disability insurance, like unemployment insurance. These are things that employers have paid for in this country, and the arguments you hear about not having a mandate really resonate with the arguments that people made in the 1930s against the 25 cent minimum wage when that was proposed. And I think that'll happen. It will be phased in over several years, but I think that piece will be done.

MS. WARNER: Dr. Healy, do you agree that the employer mandate - - by that we mean most coverage will come from the employers -- was politically in any event the only way he could go?

DR. HEALY: No, I don't think so. I think that what you really have to do is look at the people who are uninsured, tease them out, and find out how we can design tailored programs for people. 60 percent of them are young people who simply don't want to be burdened with a price tag of two thousand, four thousand dollars, when they're never going to consume that much cost in a year. So I think there are ways that we could have individual mandates that give the individual patient more responsibility and more control over a large amount of money that's going to be spent per capita. There's a very deep feeling of paternalism among this plan that says people can't handle their health care for themselves, we're going to seize and control it, tell them what they can do, what they can't do. It's a "one size fits all" approach. And I think Joe knows that back 20 years ago we were all toying with national health insurance, but a lot of social experimentation has gone on around the world which has shown that national health insurance leads to long waiting lines. It does not lead to efficiencies, and worst of all, it is a failure, judged by the fact that most of those countries are starting to privatize.

MS. WARNER: Let me go back just though to the politics of the situation right now. What kind of a job do you think President and Mrs. Clinton have done so far in trying to get different constituency groups behind this?

MR. CALIFANO: To date, I think they've done a remarkable job. I will tell you, and I have said it publicly, six months ago, I thought there was no prayer of having a major reform by the end of 1994. I think now the chances are better than 50/50. I think one point, the emphasis on the employment relationship is important because of when you look at those thirty-seven to forty million people, two-thirds of them work, or are dependents of workers. And if you're Chrysler, or you're in the steel industry, or you're IBM, or you're Kodak, your blood is boiling if you're running those companies when you look at retailers and fast food companies and hotel chains, big multi-million dollar corporations that don't cover their employees. So that piece, the quickest way to knock off a big piece of that is to mandate. But I think in the basic question, they've done it very well, gone around the country. They have cobbled together a remarkable array of ideas. And I think when you look at the 229-page plan, it's really more of a big barrel of ideas than it is a plan that dots every "i" and crosses every "t." And there, I mean, I give them A+ for this, I mean, much better than I ever thought they could do. And I think Mrs. Clinton has been remarkable because she's learned so much. I met with her, for example, on, on covering substance abuse and the importance of covering substance abuse, which Dr. Healy, I think, shares. In one way or another we've got to deal with that problem. She was remarkable. She asked all the tough questions. She asked us to put together the best people in the country to put treatment programs together. We did. We gave them a package. I don't think they've adopted every bit of it, but they've taken, they've recognized you've got to cut, you can't have health care reform in this country without doing something about substance abuse. I think they've done a good job so far.

MS. WARNER: Dr. Healy, do you think that she has brought the Republicans along? Where -- how do you think the Republicans on the Hill are going to play this?

DR. HEALY: First, I think that there is no question that both of the Clintons have done a magnificent job in making health care finally a front burner issue. I think every American has focused on this issue, and I do believe it has to be a non-partisan issue. But that does not mean that there isn't a very strong threat of political philosophy that is inherent in the approach to health care solutions. And I think that the Democrats traditionally think the solution is bigger and bigger government and more and more taxes, and I think the Republican political philosophy is smaller government and more empowerment of individual people. Let taxpayers manage their own money.

MS. WARNER: But, I mean, as a practical matter, how do you think Republicans are going to play it here? They don't have the votes to pass their own plan. What do you think is going to be important to them, to Republicans, in making changes to the plan, which Mrs. Clinton has indicated an openness to do?

DR. HEALY: Well, I think the most important thing is to work in a constructive way focusing on the people who are uninsured and not trying a massive social experiment with over 250 million Americans, 80 percent of whom are adequately covered. I think that the strategy of the Republicans is going to have to be to focus on the job that needs to be doneand not to buy into a massive restructuring of the entire health care system in this country which has economic consequences, as well as human consequences.

MS. WARNER: Please.

MR. CALIFANO: Can I just -- the issue I don't think is a Democratic/Republican issue. I think Republicans and Democrats will split all over the lot. I think the politics of this issue is one trillion dollars, and it's on the side of the people that are paying. The federal government's paying. The states are paying. The cities are paying. Business is paying, and individuals are paying. They're going to fight over not paying any more or paying less. On the side of the people that are getting the trillion dollars, the health insurance companies, the HMOs, the doctors, the hospitals, the medical equipment manufacturers, the pharmaceutical companies, the hospital unions, the nurses, they're going to fight over hanging on to their piece of the pie. And I don't think this problem will break in Congress between Republicans and Democrats. I think it's going to break among those interest groups. And I've often said I wish the President had been able to get campaign finance reform through before the health care bill went up because the buckets of money that will pour in and already are pouring into Capitol Hill, this is the way this issue will break politically.

DR. HEALY: I think there still is a core issue that's very polar, and that is, is the solution going to be government telling you what to do about your health care, or is it going to be the individual making choices? And, remember, remember, it was the President and the Vice President who were all over this country just a few weeks ago telling us that the government needed to be reinvented. There's a mammoth intellectual inconsistency in seeing that government inefficiencies with $50 to fill out one form, which is why government needs to be reinvented, that same bureaucracy is going to seize 15 percent of our economy and take over the health care of 250 million Americans. That's the core issue.

MR. CALIFANO: I would urge everybody to go back and read Richard Nixon's message to Congress in 1971 and his message to Congress in 1972. What did he say? He said we need an employer mandate, and he said, we need more HMOs so we get people into more efficient health care systems. But that's the core of what Bill Clinton is saying. That's exactly what Jimmy Carter said. After we looked for about two and a half years at every alternative, we ended up in the same place.

MS. WARNER: Okay. That raises a question. All these other countries, all these industrialized countries have health care. Explain why, one, we don't have any national health care, but two, why it's going to be so much more difficult here than it was in Europe to get this?

MR. CALIFANO: We don't have it I think in part because of something Dr. Healy said, which is most Americans have health care, and there is, there is a safety net out there. We forget, people that really get sick or really get hurt get health care, they get it in the most inefficient way, in emergency rooms of Cleland Clinic, and elsewhere, and what have you, so it's there. And the second thing is, in this country now, I mean, health care is almost America's biggest business. It is the only industry in the country where hundreds of thousands of jobs were created during the 1990/91 recession, and there this is as high stakes as political poker gets in the Congress of the United States.

MS. WARNER: Whereas, of course, when it was instituted in European Countries, health care might be 2 or 3 percent of the GDP. It wasn't a huge -- just take Britain, for example. First of all, it's a very small percentage but also all they did, people say, oh, it's socialism. But Britons aren't socialists. What happened was the voluntary hospital system in Great Britain had broken down during World War II, and the government was running every hospital. Every doctor and nurse was in the military, on the government payroll. They just legislated the existing situation in 1945. That's what they have done. Incidentally, I will share one thing. I think Bernadine makes one important point. The cost part of this equation, the rising health care part of this equation exists in every country in the world. It's different here because doctors are paid more here, but we also have a lot of problems. When you look at Canada, we have AIDS in a way and substance abuse and violence in a way that other countries don't have it.

MS. WARNER: Sadly, we're almost out of time for such a complicated issue. Let me end with one question. And I'll start with you. Right now, we spend 14 percent of our GDP on health care. The Clintons hope to hold to 17 percent by the year 2000. Can a modern society be economically healthy spending just that much on health care for its citizens? Does it make sense?

DR. HEALY: Well, I think it is expensive, it's good value, but it cannot continue to rise at the rate it's been rising. Everyone agrees. That's where I think there is consensus across the board, and I think some of the positive aspects of the Hilton -- of the Clinton health plan is that it does talk about administrative inefficiencies, it talks about a universal health insurance form, which will be a blessing for everyone, would probably save billions of dollars. It talks about tort reform. It also talks about tax deductibility for premiums of people who are self-insured. So there are a lot of elements in there that will help to drive down the cost of care, but we have to be careful that when we speak about making health care cost efficient that we take out the fat and don't cut into the bones and the muscles because America is not ready to say no to transplantation, to kidney dialysis, as many countries around the world do. America's not ready to say, we're not going to save that baby who's only a thousand grams. Other countries do.

MS. WARNER: Mr. Califano.

MR. CALIFANO: I think -- I mean, I think we can hold the rate, the proportion of GNP, but let's not be unrealistic. Health care costs are going to rise. What we're talking about is the rate of increase. You're not going to bring 40 million people - - you know, it's not going to be good for my father, my mother, my wife, or my child -- into this system and keep the cost the same. And I think we have recognize and be realistic about that. I think we can hold them. I think that in terms of, of the big ticket items, cultural changes, like the way people think about dying, whether they want to be tied up to tubes or be at home, will have a greater impact than any of the law or regulation those people are writing.

MS. WARNER: Well, thank you both very much. And we'll welcome you back to watch the speech together. Thanks, Roger. Over to you, Roger. FOCUS - MODEL FOR CHANGE

MR. MUDD: Next, we look at one health reform model that is already up and running. The city of Rochester, New York, has a unique health care system that President Clinton has praised as worth learning from. Medical Correspondent Fred De Sam Lazaro has this report on the Rochester system. It first aired on the NewsHour in February.

MR. LAZARO: For 21-year-old Jason Bowman, it's been an arduous journey back to a normal routine two years after it was interrupted by a severe car accident.

JASON BOWMAN: And I fractured my C-6/C-7 vertebrae, which left me paralyzed. And that was the only thing that happened actually was a broken neck, and I didn't suffer any broken bones or legs.

MR. LAZARO: It was a whiplash kind of an injury?

JIM BOWMAN: Yes. Hearing the word "quadriplegic," when you know what it means is pretty devastating, and so you know that you're in for -- you're going to be locked into the health care system for quite a while.

MR. LAZARO: Given that grim diagnosis, Jim and Barbara Bowman say their son has made a remarkable recovery, which they attribute to a ferocious spirit and superb but expensive medical care. Jason's medical bills have neared $1/4 million. Almost all of it was covered under his parents' insurance policy. The Bowmans run a veterinary hospital with eight employees. In most of the U.S. Jason's bills would have jacked up the premiums on their group health insurance. That's not the case here in Rochester, New York.

BARBARA BOWMAN: We pay the same premiums that anyone else pays. We've had rate increases, but they're across-the-board and according to whatever the overall increase in health care is for the area.

JIM BOWMAN: He hasn't been singled out in any way, as we can see, because of what he's cost the system or because of his injury or because he will be an ongoing burden to the system.

MR. LAZARO: Here in Rochester those premiums are about a third less than anywhere else in the U.S. As a result, only 6 percent of Rochester's citizens do not carry insurance, are fewer than the 14 percent on average nationally who are uninsured. Four factors account for Rochester's relatively high access and affordability: One insurer, Blue Cross Blue Shield, has a virtual monopoly in the city; there is little overlap in the services health care facilities provide; the insurer and health care providers set fees after tough bargaining; and no one is denied insurance coverage, not even the sick. Their insurance premiums are determined by a mechanism known as community rating. In other words, the risk of covering a Jason Bowman is spread over the entire community of 230,000, not just the veterinary clinic group. It's a system that like everything else in Rochester, it seems, has its origins in the giant Eastman Kodak Corporation. Kodak employs 40,000 people in Rochester. It's been a huge business here and a philanthropic, even paternalistic presence since its founding in the late 1800s by George Eastman.

DAVID EDWARDS, Kodak Spokesman: Early on as health care began to become more and more expensive, he began to look for ways of helping Kodak people prepare for that, and that led to work in this community to institute one of the very early insurance arrangements around hospital care.

MR. LAZARO: Early medical insurance policies were priced according to communitywide risks, but starting in the '30s as the health insurance industry grew, the market became fragmented. Insurers offered big employers discounts in exchange for their volume business, forming groups separate from the community. What's left in the risk pool are self-employed individuals or small businesses, like car dealerships. With indeterminate risks, they are forced to pay higher premiums. They're also subject to exclusion based on medical history, an insurance tactic known as "cherry picking." In Rochester, however, spokesman David Edwards says Kodak asked its insurer to stick with the community rating system.

DAVID EDWARDS: We are, in effect, pooling with the large numbers of small businesses and individuals. In fact, in this community an individual can walk in off the street and, in effect, pay the same price that Kodak pays for health care. And it's more expensive to do that, so what we wind up doing, in effect, is subsidizing to some extent the administration and management of the care for those groups.

MR. LAZARO: One reason Rochester is able to have a community rating system is the city virtually has one insurance company, Blue Cross Blue Shield of Rochester.

SPOKESPERSON: [on phone] You do have a copy of the claim that you submitted?

MR. LAZARO: Kodak has long given its insurance business exclusively to the Blues. Other employers have followed suit, essentially sharing in Kodak's volume discount, giving Blue Cross Blue Shield a near monopoly in Rochester and keeping out the so- called "cherry picker" competitors. Howard Berman is Blue Cross Blue Shield's chief executive officer.

HOWARD BERMAN, Blue Cross Blue Shield: Large employers play a - - historically have played a remarkably important role, and particularly the Eastman Kodak Company. We, however, at Blue Cross Blue Shield have over 6,000 accounts, 6,000 businesses that buy health insurance through us.

MR. LAZARO: Those businesses and Blue Cross Blue Shield form a powerful coalition with a long history of negotiating with doctors and hospitals to establish fees and keep costs down. The results are readily evident. There's been no addition to Rochester's hospital capacity since the 1960s in sharp contrast to national trends. Today while hospitals nationwide are closing or merging, Rochester's eight facilities are typically ninety, sometimes one hundred percent occupied. Because they're all nearly full, hospitals cooperate more than compete with each other. There is little duplication of services.

MR. LAZARO: It's a subsidy that's been well worth it. The system it helped preserved has saved Kodak millions in health care premiums.

DAVID EDWARDS: Rochester costs are probably in the neighborhood of 25 percent to 30 percent less than our average per capita cost for domestic employees scattered around the rest of the country. Radiologist Derace Schaffer says the big emphasis on cost control means innovation and new technology come to Rochester much later than other cities. There are other drawbacks, Dr. Schaffer adds.

DR. DERACE SCHAFFER, Radiologist: We periodically close our emergency rooms to new patients or we find ourselves at times having to discharge patients somewhat earlier than we'd like to send them home just because there aren't enough beds, not enough rooms in the inn. And the same thing applies to our intensive care units and coronary care unit beds in the community, where we sometimes are shuffling patients around.

MR. LAZARO: While he praises the community rating system for increasing access to health care, Schaffer is critical of an approach he feels penalizes doctors.

DR. DERACE SCHAFFER: You cannot place too much emphasis on the fact that the Rochester system works because of the fact the physicians have accepted a much lower reimbursement system here than elsewhere.

MR. LAZARO: Doctors are also subjected to oversight from the insurance company. They must often clear or justify medical or surgical decisions.

DR. DERACE SCHAFFER: Everyone else in that system is concerned, primary concern is cost. The physicians' primary concern is quality of care. The physicians find themselves often placing themselves between the patients and the health care system in order to protect the patients from the system.

MR. LAZARO: However, patients of the Rochester health care system don't seem to share that concern. A recent poll showed the vast majority are satisfied. Dr. Robert Blendon of Harvard School of Public Health who conducted the survey says overall, Rochester has a balanced approach.

DR. ROBERT BLENDON, Harvard School of Public Health: I just don't see any evidence that Rochester is a model of a declining culture of medical practice. I think physicians who are paid less are angry, and I can understand their frustration, but that's one of the reasons why the average person in Rochester can afford their health insurance. So if we have to trade off somewhat less well paid physicians for people who can afford health care, I always come down for health care.

MR. LAZARO: Along with doctors, Blendon says patients will have to come to terms with limits to their autonomy. It's a dilemma the Bowmans faced when they attempted to move Jason to a rehabilitation facility in Denver. The local hospital refused to make the referral needed under their managed care policy.

BARBARA BOWMAN: That was a plain old statement that "this was as good as any other spinal rehab facility in the world." And that's a quote. It's not as good as any other.

MR. LAZARO: After producing research showing Rochester lacked the specialized facility her son needed, Barbara Bowman says the insurer relented.

JIM BOWMAN: We can do that. Other people that were maybe not quite as knowledgeable or a little bit more meek than we were may have not been effective in doing that. I don't know.

DR. ROBERT BLENDON: Well, we're going to face a choice. If you want an insurance plan that allows you to go, for example, to every cancer center in America that you choose, that plan will be more expensive than one that says we've negotiated a special rate at a center in our community. And I think we're going to have to decide as a country if we want to allow people to make those choices.

MR. MUDD: The Rochester plan was closely studied by members of the Clinton task force, and parts of it will be reflected in the plan Mr. Clinton presents to the Congress later tonight. CONVERSATION

MS. WARNER: Finally tonight, one of our weekly Charlayne Hunter- Gault conversations. As events unfolded in Moscow yesterday and today, the world was scrambling to react to the situation. The breathtaking pace of current events and how they frequently catch us unaware is the theme of a new book The Roar of the Crowd, How Television and People Power are Changing the World. It's by former New York Daily News editor Mike O'Neill, who recently sat down with Charlayne.

MS. HUNTER-GAULT: Michael O'Neill, thank you for joining us.

MR. O'NEILL: Great to be here, Charlayne.

MS. HUNTER-GAULT: You believe that we're in the midst of a revolution not only in America but in the entire world. Tell me a little bit about that revolution.

MR. O'NEILL: Well, I think that in order to understand a lot of the dynamics of what's now going on all over the world in terms of ethnic strife and turmoil here and turmoil there, we have to understand I think that one of the real catalysts of all this is what I would call the mass communications revolution, i.e., the enormous spread of television, computers, satellites, et cetera, which is drawing the entire world together, much more closely together than ever before in history. And it's -- it's a very profound kind of a revolution, just take one aspect of it all. You now have most of -- certainly a large majority of the people of the world seeing the world, seeing the world around them through television for the first time in history, peasants who have never even -- don't even know how to read are able to tune into the world. The monopoly of literacy, which has existed really since the beginning of human history, that monopoly has now been broken. What does it mean? After years of exclusion really, ordinary people now are able to demand their place in the sun. They're able to say that they want the kind of life, the good life that they see on the screen.

MS. HUNTER-GAULT: That's what you, what's you call "people power?"

MR. O'NEILL: People power right, people that, for example, in remote areas of China are now aware of the enormous increase in economic well-being and the good life, for example, being led by many of their fellow Chinese say in Eastern provinces, in Fujian and Guan Dong. And they then register their feelings locally, and those are felt and even though they are not out necessarily demonstrating today or tomorrow or the next day, although there is, as we see all over the world, a great deal of activism. We see people migrating as a result of what they see on television. We see people demonstrating. The students in Tiananmen Square had seen demonstrations in South Korea that influenced their desire to demonstrate in Tiananmen Square, an amazing thing.

MS. HUNTER-GAULT: One of the things you write in your book is that society shaped by the mass media are coming to dominate the world. Tell me a little about that.

MR. O'NEILL: Well, let's take, for example, this fad that we now have going around the world. We have the idea in the United States that somehow or other democracy has triumphed as a result of the collapse of Communism. And it's true that Communism has collapsed, but we don't -- I don't think we know whether democracy is going to triumph. One of the aspects of, and one of the most popular aspects of the so-called western, liberal western approach to government, et cetera, is a, a consumerism, i.e., a mass marketing of goods, a mass marketing of services, et cetera, and that is now being spread around the world as part of the democratic "western model" of the way a global, an interdependent global economy is now going to operate. What does that do? In China now, you have TV commercials which people are being urged to buy this, that or other individual item, consumer goods, toothpaste, what have you. Well, that is the phenomenal -- that's a real phenomenon because it is a direct approach to an individual consumer in China and asking that consumer to make a decision on the basis of what he or she saw on television, that is pushing the idea of individualism that is quite antithetical to the kind of family-oriented, ancestor, ancestor-oriented, or group-oriented kind of society that has existed for centuries in China. Now nothing's going to happen today or tomorrow, but what this whole force is doing, all this mass communication of the mass marketing idea, is doing, it's breaking down these kinds of social patterns, and at the same time it's, it's -- it tends to promote individualism versus collectivism, which is the hallmark of the totalitarian systems. And it promotes pluralism as against mass, the kind of mass governance that we saw in the case of Nazism.

MS. HUNTER-GAULT: But you also say that while people power is becoming nearly universal, it is, because of the nature of the medium, the potential for having power without knowledge is great.

MR. O'NEILL: Right.

MS. HUNTER-GAULT:Now explain that.

MR. O'NEILL: Well, I guess what I'm talking about there is the fact that if you have a governing, a system of government in which the decisions are being driven by instant emotional reactions to an event, for example, why did the United States become involved in Somalia? It became involved because of the emotional reaction of the American people. Why did President Mitterrand fly to Sarajevo? Because he was under pressure to do something. Of course, he ultimately never, never, ultimately didn't do very much.

MS. HUNTER-GAULT: But that's a good thing, isn't it?

MR. O'NEILL: Yeah. The part of it that's good, of course, is that it does force the governing, ruling elite, if you will, to be conscious of and to respond and be sensitive to public opinion. On the other hand, if that public opinion demands immediate action in any given instance, it eliminates the kind of deliberative process, the period of time when you would take normally to study a problem and deliberate the pros and cons, consider all the options, and ultimately make a decision based on a very reasoned kind of discourse, and deliberative process. That's quite different from immediately reacting to some emotional explosion. The other part of all this is it tends to, to focus the leadership of the government, say the White House, on a daily rush of crises -- the floods out in the Middle West one day, the riots in South Central Los Angeles another day. And longer range and deeper problems that have no telegenicity, that have no -- cannot be easily translated into images -- those tend to fall into the back burner, don't get any attention at all. And yet, in the long run, they may be much more, much more important to deal with.

MS. HUNTER-GAULT: You also believe that journalists are complicit in this, right?

MR. O'NEILL: Well, yeah, right.

MS. HUNTER-GAULT: You mean, me?

MR. O'NEILL: Co-conspirators, present company excepted of course.

MS. HUNTER-GAULT: Of course. One of the things you say is that journalists arrive late at the front lines of history.

MR. O'NEILL: Right, right.

MS. HUNTER-GAULT: What's the answer to this? I mean, because you write about a society dominated by mass media that is [a] appealing to the lowest common denominator of culture. You talked about the consumerism now, the lowest common denominator of politics. What's the answer?

MR. O'NEILL: Well --

MS. HUNTER-GAULT: Is the genie out of the bottle?

MR. O'NEILL: I think it is. I think technology is really driving society. It is actually driving change, and the velocity, and the volume of change are simply enormous, and it's driving change faster than institutions, including journalism, are able to, to adapt to that change. And I -- the great fear I have, instead of all this euphoria about the collapse of Communism and the heyday of a new world order, as George Bush put it, is that, that we may have the -- we may -- the stresses of social and political stresses may be building up so rapidly, so much faster than the institutions are adapting to, to cope with 'em, you can have the same kind of social breakdown that you had after World War II, which would be an absolute catastrophe. Do I have the solution to this? If there is any kind of solution at all, I think we have to put an emphasis on prevention instead of reaction. Journalism now is designed to react. It's designed to report what has already happened.

MS. HUNTER-GAULT: But it's always been the case.

MR. O'NEILL: Yes, exactly.

MS. HUNTER-GAULT: So what's different, and what's new? And why would someone watching this not say, well, these are the musings of a print man who's probably always had an electronic media bias?

MR. O'NEILL: Right. Exactly. Well, No. 1, I think that the print media have the same responsibility to try to move ahead of the curb, to get ahead of the curb, rather than falling in behind the curb. Now, as I say in the book, I don't know whether this could be achieved or not. I'm just saying that an ideal world would be one in which journalism, politics, and diplomacy would try to catch social change at a much earlier stage. If we don't do that, all sorts of tremendous problems are coming down, coming down the pike at us, and the psychology that is integral to what, the kind of mass consumerism that we're talking about, the so-called mass market economy that we're pushing around the world, that psychology is to think about today and not tomorrow. And I worry. That's a very serious concern of mine.

MS. HUNTER-GAULT: Well, Michael O'Neill, I hate to end on that note, but we will. Thank you for joining us.

MR. O'NEILL: Thank you. RECAP

MR. MUDD: Again, the main stories of this Wednesday, at least 40 people were killed when an Amtrak passenger train derailed and plunged into a bayou near Mobile, Alabama. Officials said 13 people are still missing. Boris Yeltsin appeared to gain the upper hand in this political battle with hard-liners for control of Russia, and President Clinton prepared to unveil details of his long-awaited health care reform plan in his speech to the Congress. Good night, Margaret.

MS. WARNER: Good night, Roger. That's the NewsHour for tonight. We will have full coverage of the President's health care speech to Congress later tonight on most of these PBS stations, and we'll be back tomorrow with an in-depth look at the Clinton plan. I'm Margaret Warner. Thank you, and good night.