On the eve of an historic vote in the House of Representatives over health services for seniors, Robin MacNeil moderates a debate with two members of the House, and two lobbyists. Rep. Bill Thomas (R-CA) is one of the lead authors of the GOP bill, and Rep. Jim McDermott (D-WA) is the sponsor of one of two alternate Democratic bills. Morris Deets is the executive director of the American Association of Retired Persons, and Dr. Lonnie Bristow is the president of the American Medical Association.

ROBIN MAC NEIL: Congressman Thomas, your side's been making some last-minute changes in this bill. Some Republicans are saying there are still enough doubters, something like 20, to block it. How do you see it?

REP. BILL THOMAS, (R) California: (Capitol Hill) Well, obviously, on any major piece of legislation that is as complicated and affects as many Americans as changing a program like Medicare everyone is concerned about what happens to them. We are explaining the bill the way in which it's going to work, and there are individuals who are expressing to us concerns in various areas. What we're doing is making adjustments within the various structure of the bill as long as it meets those basic parameters that we indicated were essential not only to save Medicare from bankruptcy but to preserve, protect it, strengthen it so that people who are paying taxes now are going to have a program available to them.

ROBIN MAC NEIL: So this radical reform, major reform, depending on which way you look at it, has, has created enough anxiety even in your own ranks to threaten your majority, which has been impregnable up to now, is that true?

REP. THOMAS: I wouldn't say it threatens our majority. It requires us to explain in detail to more people than is ordinarily the case. This is something that's very, very sensitive, and as you've seen in terms of the folks who are opposing this, they use rather extreme language to misrepresent a number of things that we're doing and they're hoping on creating enough fear among seniors that they'll panic our members. What we're doing is providing them with facts, and we're moving forward to the vote tomorrow.

ROBIN MAC NEIL: Congressman McDermott, despite your Democratic efforts, which you've just heard described as sowing fear, have the Republicans got this sewn up, do you think?

REP. JIM McDERMOTT, (D) Washington: (Capitol Hill) Well, they are tomorrow going to try and pass 900 pages worth of legislation, that probably two people besides Bill Thomas have read. They are going to ram it through, telling people that it's all right, it's going to make everything all right, but, in fact, you cannot cut $270 billion from the Medicare program without hurting people, particularly when you're using it for a tax break. There is no justification for more than $90 billion in adjustments. We offered that. They rejected that. They need the money for the tax break.

ROBIN MAC NEIL: That is your proposal, isn't it, the $90 billion proposal?

REP. McDERMOTT: Yes.

ROBIN MAC NEIL: And I'll come back to that a little bit later in the program. Mr. Bristow, after the AMA's deal with the Republican leadership to save the doctors' threatened $300 million in cuts, are you now fully behind the Republican reforms?

DR. LONNIE BRISTOW, American Medical Association: (Chicago) Well, in the first place, there was no deal in the sense that you've described it. What occurred is the American Medical Association went to the authors of the bill and explained a deep concern that we have about a threat to accessing care for our senior citizens. That threat is because of the proposed further cuts in pay that physicians will receive on top of what they have received over the last 10 years. As a result of those cuts over the last 10 years, doctors today receive 63 cents on the dollar for care that would be paid by a private insurance company as $1 of care. Now, that coupled with the fact that most physicians have an overhead of 50 percent, while simple math tells you that if you're only getting 63 cents on the dollar and 50 cents is already going to overhead, paying for rent, et cetera, that the margin that physicians have is very narrow. And if you cut too close to that 50 cents, then you will threaten access to care for our senior citizens, because physicians simply won't be able to afford to take care of them. We explained that to the GOP leadership, and we were very pleased to see that they responded, they listened, and they said, we are still going to have a cut for you, but we're going to try our best to make sure that that cut will not endanger access to care. That was what we were seeking, protection for access to care for the senior citizens.

ROBIN MACNEIL: Well, can you and the hundreds of thousands of doctors you represent--thousands of doctors you represent--now tell your Medicare patients in good conscience that this is going to be good for them, this Republican reform?

DR. BRISTOW: You bet. We believe that this proposal--proposed legislation will constitute a true reform of the system, and it will result in patients having more choice and control over their health care decisions than they've ever had before. We think that's the way it should be. Choice and control should be in the hands of patients, not government.

ROBIN MACNEIL: Do you think, Mr. Deets, that your ARRP members, do you and your members think that doctors are justified in that confidence, that they can in good conscience say this is good for their patients?

HORACE DEETS, American Association of Retired Persons: Well, I can't act as Dr. Bristow's conscience or that of the AMA, but I disagree with Dr. Bristow as to whether or not this is going to guarantee access for seniors. I think that the size of the reduction is too much in too quick a period of time, and all it's going to do is buy a few more years than a lesser amount would buy, and we still haven't resolved the problem of what to do in the long-term about Medicare reform for when the baby boomers start turning 65.

ROBIN MACNEIL: Well, tell me in specifics why would it threaten access, as you see it, in terms we can understand.

MR. DEETS: Well, in--what's happening is costs will continue to go up over the next seven years. Federal payments will come down. Federal payments will be about 6 percent a year for the next seven years. Costs will be at 10 percent. That 4 percent differential isn't being reduced; it's just being shifted. It's being shifted to doctors, to hospitals, and ultimately to beneficiaries as well. As you cut back, as Dr. Bristow pointed out, on how much you pay doctors and hospitals for care, you do run the risk of jeopardizing access, as well as the quality of care.

ROBIN MACNEIL: Well, how do you run the risk of jeopardizing access? You're a senior citizen. You were entitled to Medicare, and you had a condition, and what would happen under these reductions? What do you fear might happen under these reductions?

MR. DEETS: Well, I think increasing numbers of doctors will not want to take Medicare--Medicare patients, and they will be full. They will take no new patients. We've already had anecdotal evidence of this, that people have had difficulty when they've moved getting in to see a physician, because the doctor says we only get 63 cents on the dollar from Medicare right now, we can't afford to take any Medicare patients. And so Medicare patients will not be as welcome because of that.

ROBIN MACNEIL: Let's ask Dr. Bristow about that. It's true. We've seen the same anecdotal evidence. Doctors are already refusing to take Medicare patients. What about Mr. Deets's fear that more of them will refuse, and, therefore, reduce access?

DR. BRISTOW: Well, that's the beauty of the proposed legislation. What the legislation does is it reforms the program, rather than simply apply a bandaid to it. It will change the incentives for both patients and doctors and hospitals to be--to help them become more cost-conscious, more price-sensitive than they've ever been before. We believe those forces of competition will actually slow the rate of growth of the cost of this, this system, in a natural way, and in a better way, but at the same time, end up giving patients more choices and more control over their health care decisions.

ROBIN MACNEIL: But will it--do you think in the AMA, just looking at doctors' concerns now, that it will reduce the number of doctors who want to serve Medicare patients?

DR. BRISTOW: If we have the proposed legislation passed, as it's been drafted thus far, no, we don't believe that that's going to result in fewer doctors taking care of Medicare patients. In fact, we think that there will probably be more doctors because there will be positive incentives created for them to be able to participate in this program. It'll--it'll get much of the governmental administrative hassles that are currently burdening the program out of our hair, so that we can be much more efficient, much more effective in taking care of patients.

ROBIN MACNEIL: Congressman McDermott, how do you--what's your comment on that?

REP. McDERMOTT: Well, what they have done in this bill, the doctors cut a deal not only for more money, but they also cut a deal for the right to set up what are called Provider Service Organizations that operate under no rules. They will not be regulated by state insurance laws. The doctors will be able to balance bill, and what Dr. Bristow is saying is they will force the seniors out of the Medicare system as we know it and gradually all the doctors will be in the PSO's, and there they can go after the patient for as much as they want.

ROBIN MACNEIL: PSO's?

REP. McDERMOTT: Provider Service Organization. No one knows what it is.

ROBIN MACNEIL: You mean not like an HMO but a group of doctors who come together to provide--

REP. McDERMOTT: Exactly. A group of doctors, it may be a hospital, it's not clear what they are, but the doctors cut that deal so that they would have the ability to balance bill. And that's--they say they're getting rid of the regulations.

ROBIN MACNEIL: What is balance bill, what does that mean?

REP. McDERMOTT: Balance bill means when Medicare pays your bill for a senior citizen the doctor can only bill another 15 percent above; he can't just go for whatever he wants. There's a limitation in the law today. In the legislation that's before us, they are going to take away that restriction, and doctors will be able to go after whatever they want from the patients.

ROBIN MACNEIL: So Congressman Thomas, is that the increased incentive for doctors?

REP. THOMAS: Robin, as I said earlier, there are some folks peddling fear. That's back up and look at the facts and what's really going on in the bill. Jim McDermott said that there were no rules over these people. They're totally controlled by the Secretary of Health & Human Services. She structures the rules to make sure these people offer what is necessary. They have to offer the full service structure. You can't just have doctors organizing. It is a combination of doctors and hospitals. What's the problem, and why are we trying to respond to it? Today, doctors are afraid of becoming employees of large corporate organizations coming in and raiding in various towns.

ROBIN MACNEIL: HMO's and things?

REP. THOMAS: Yes. Corporate managed care operations. Local hospitals are going under because they can't compete with the kind of structures. What the provider-sponsored organizations, hospitals and doctors locally, can now do with the removal of some antitrust provisions that are frankly antiquated or 19th century manufacturers and shouldn't be applied to professionals trying to offer service at a reasonable price, under the Secretary's structure, communities will be able to get the benefits of managed care savings, but it'll be the local doctors and the local hospitals providing it, community-based managed care, and they will be doing it under a defined contribution structure. They will be moving from the cost plus fee-for-service to the defined contribution structure.

ROBIN MACNEIL: Mr. Deets, let's go back to you, and let's go back to the individual, man or woman, who's of Medicare age listening to this and perhaps a bit confused by all the technical terms being used. What is the difference you fear it will make to an individual that makes you worried about this bill?

MR. DEETS: I think the big fear I have is that the ramifications of these changes are going to take place in about five, six, seven years. The kind of alternatives being set up will be attractive to the people who are younger, who are healthier, and who have money.

ROBIN MACNEIL: So it's good for them, for people over 65 who are reasonably healthy and so on, it'll be good for them, you're saying?

MR. DEETS: Well, it will be attractive for them.

ROBIN MACNEIL: Attractive.

MR. DEETS: What remains to be seen is if it will be good. For example, we can attract them by offering more benefits to this new program. A year down the road, if our costs get tight, we may cut back on those benefits. At the same time, there's going to be a cap, which is called a fail safe, on the traditional Medicare fee-for-service program, which is going to be left with the oldest, the sickest, and the poorest people. And if those costs exceed a certain amount, that cap comes into play, which is going to further exacerbate the problem of controlling costs to physicians, hospitals under that fee-for-service plan. I think what people need to know is, is this going to cost me more, am I going to have the same level of benefits?

ROBIN MACNEIL: It is going to cost more for the Part B part, is it not? I mean, the fees are going to go up for that.

MR. DEETS: The fees will go up. The Part B premium will go up. In fact, it will double over about seven years. And then there's the affluence test, and I'm not sure exactly where that number will end up. It's $75,000 for an individual in the House, I think $50,000 in the Senate. And here again is a question, why are we applying a principle that the government should not subsidize health care for seniors if they are wealthy? Why not apply that across-the-board? The government supplies a subsidy for health care for you and me and everyone else who has an employee benefit, because our health benefits are not taxed. That's a form of subsidy. So I have a question on the equity of that part.

ROBIN MACNEIL: Let's get a quick answer from Congressman Thomas on that. Why is that principle which, which he's just outlined very clearly, why is that not being preserved?

REP. THOMAS: Rather than preserve it, I think he said it exactly correctly. It makes no sense whatsoever in today's world to have government subsidize millionaires for what is a voluntary program.

ROBIN MACNEIL: But as he said, it does that now for people who have very good health benefits in their employment.

REP. THOMAS: You get a 100 percent tax write-off from corporations. Horace I'm with you. As I move into the incremental health care reform area, I'm going to try to make sure that the hard-working American taxpayer doesn't subsidize other people who should otherwise pay for their health care.

ROBIN MACNEIL: Okay. That's that point.

REP. THOMAS: We're going to move forward to try to change that philosophy of the way in which taxpayers' dollars are used. You shouldn't subsidize rich people.

ROBIN MACNEIL: Okay. Let's go back to Dr. Bristow here a moment. What about Mr. Deets's fear that the young and healthy people over 65 will take the inducements to go into health maintenance organizations, managed care organizations, which may have better benefits for them, and leave Medicare stripped and, and diminished for the really sick people?

DR. BRISTOW: Well, I think that fear is misplaced, because what we're saying is that those patients who want to stay in the traditional Medicare program may certainly do so. It will be there and provide the security of having no change. But those who wish to try something different, who believe that they, in fact, may be able to make better decisions about their own health care than the government, will have a different set of options that they can choose from. But let me--let me point out that the discussion that you've had almost suggests that we have an alternative of doing nothing, and we do not have an alternative of doing nothing. The status quo will not suffice. The Social Security commissioners, themselves, have said that Part A of this program is going to go bankrupt by the year 2002. Something must be done. The argument that you hear evolving is over whether we should do a little something or a lot of something. What the AMA is saying is, let's correct the underlying flaws in this system, let's save Medicare now, let's not simply throw another life preserver to it and then sail away, the way we've done so many times during the last ten years.

ROBIN MACNEIL: That brings us back to Congressman McDermott's alternative, which is to spend--which is to cut only $90 billion now.

DR. BRISTOW: You're absolutely right.

ROBIN MACNEIL: And let's go back to the Congressman.

DR. BRISTOW: But that's throwing a life preserver and sailing away, saying, we'll be back in a few years to take a look at this.

ROBIN MACNEIL: Congressman McDermott.

REP. McDERMOTT: You've got to remember that the AMA opposed Medicare in the first place, and they're trying to gut it today, so you can't--you've got to take everything Dr. Bristow says with a grain of salt. The $90 billion stabilizes the program to 2006, and our program also sets up a commission that says we will come back with a way to deal with the problem that even Bill and I agree on, and that is the baby boomers. The year 2010 is going to be a real problem for Medicare, and we must do as we did in 1983, with Social Security, come up with a way to finance it, or there will be no Medicare after 2010. So we agree on the need for a commission.

REP. THOMAS: Robin--

ROBIN MACNEIL: I'm afraid--

REP. THOMAS: --the difference in the bill is that we stay in the black through the period; they produce an $800 billion problem right when we're trying to solve the baby boomer.

ROBIN MACNEIL: All right.

REP. THOMAS: That's the difference.

ROBIN MACNEIL: We have to leave it there, gentlemen, and we'll see tomorrow in, in the House how--who succeeds. Thank you both--thank you all.