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NARRATOR: You're watching NOW with Bill Moyers. With contributions from NPR news. This week on NOW...

MOYERS: America's great wealth keeps growing, but so does the country's great divide.

JANICE GRUENDEL: It strikes at the hard of philosophy that for a lot of these families there is a gap and they can not get out of it.

MOYERS: A report from Hartford, Connecticut, where the income gap is increasing faster than anywhere in the country.

Politics is helping the rich take tile to democracy.

PHILLIPS: Money not only talks, money screams.

MOYERS: Kevin Phillips comes out swinging again, this time against the new American plutocracy.

And soaring health care costs are making people sick and angry.

JAY HOUGHTON, NURSE, PORTLAND MAINE: The cost of medical care is skyrocketing totally out of control.

MOYERS: Does the news for Maine mean a new day over health care?




MOYERS: Welcome to NOW. We are living in a new Gilded Age.

The first one occurred in the years before the first World War, when the celebration of wealth locked arms with the notion that in the great scheme of things, the rich are the fittest of all the species, selected to rule and reign.

Well, now it's deja vu all over again.

So much money is being sucked upward to the top 1%, the wealthiest among us, that the United States is now the most unequal society of all industrialized nations.

The very rich are getting richer while wages, benefits, and working conditions for workers at the bottom continue to be downsized.

Does it matter, this great divide between the rich and poor?

We have several stories tonight that attempt to answer that question.

EMILY HARRIS, NPR REPORTER: Hartford Connecticut is the most recent flash point in the debate over the growing gap between rich and poor.

This small New England city is a classic example of a how a changing economy can create income disparity.

JANICE GRUENDEL: People who are wealthy are getting incredibly wealthier and people who are getting poorer are actually getting poorer. And it's happening over a short period of time, that is the gap is growing rapidly.

HARRIS: Janice is co-president of Connecticut Voices for Children, an advocacy organization, for working families.

GRUENDEL: In Connecticut, that gap is the fastest growing gap of any state in the country. And we are really literally pulling apart.

HARRIS: Gruendel's organization recently released a study, called pulling apart in Connecticut. It found that since 1990, income for the bottom fifth of Connecticut's families dropped by 19.5%. Down to an average of about 19% a year.

At the same time, annual income for the top fifth grew by almost 21%. Up to an average of around $181,000.

GRUENDEL: This is Upper Albany Street. This is a typical street in Connecticut cities where we have real income issues.

HARRIS: Upper Albany Street in Hartford is home to many families that fall into that bottom fifth. Gruendel believes that during the 1990s there's a reason the working poor saw their pay decline.

GRUENDEL: We lost a lot of manufacturing jobs in Connecticut. Those jobs have been replaced by service jobs. Service jobs pay much less on average than manufacturing jobs.

MARGIE SIMPSON, RESIDENT: Hartford is not a very easy place to find a job. We've been struggling, looking here and looking there.

HARRIS: Albany street resident Margie Simpson remembers better times. Her husband works hard, but earns only about $7.50 an hour.

SIMPSON: Well right now we receive food stamps, and social security for my child. Trying to get help from churches, shelters, from wherever I can. To keep me and my family going.

GRUENDEL: Here's an interesting thing. We're coming to the end of this strip of Upper Albany Street.

We're going to cross over a little bridge, I don't think we've come a half a mile, and we're going to enter, we're go to go from families having incomes of 20,000 or $25,000, to places where families have incomes in excess of 200,000 and many times over a million dollars.

HARRIS: Not everyone agrees that the income gap is a problem.

Will McEachern is an economist at the University of Connecticut. He says it's simply the results of an economy in transition.

MCEACHERN: We had what we call the great recession in Connecticut during the early 90s.

HARRIS: He says in the 90s, hoards of well paid white collar workers left the state, while many lower paid immigrants came in from abroad.

MCEACHERN: We lost a lot of people, who had pretty good jobs in defense and insurance leaving the state.

And at the other end, they were coming in through migration, and in a sense Connecticut became simply more diverse during the 1990s.

We don't really have the same group of people we had here ten years ago.

HARRIS: But according to the Connecticut study, declining income isn't just a problem for state's poorest residents.

Many middle income families who stayed in the state also saw their incomes drop, or at best made meager gains.

GRUENDEL: So we've got this sort of richer side pulling away and the middle being stable or losing a little ground and then lower income families actually losing quite a bit of ground.

HARRIS: This study examining the growing gap between rich and poor came at the same time as lawmakers were debating how to close Connecticut's budget short fall for the next fiscal year.

Two proposals, a special tax on those earning more than a million dollars a year, or freeze the wages of state workers, most of whom are middle income.

LEGISLATIVE SPEECHES: It is the wrong tax at the wrong time for the wrong reason.

LEGISLATIVE SPEECHES: And I believe that adding a one percent tax to income in excess of $1 million is fair and just.

HARRIS: Just a few weeks ago the income study and the so-called millionaires tax made front page news in Hartford, on the same day. What had been just another report now took on a political dimension.

CHRIS COOPER, GOVERNOR'S DIRECTOR OF COMMUNICATIONS: Bottom line on the budget struggle is really a philosophical difference. The Governor believes that the correct response to a shortfall is to cut spending. The reason is an impasse is that the Democratic leadership has been promoting tax increases.

GRUENDEL: People have said that pits higher income families against lower income families.

We think it's a better way to describe that would be to say that it's time for upper income families to bear a little more burden.

When we're in a recessionary time.

MCEACHERN: You could also argue, why not have them pay it all.

HARRIS: Will McEachern doesn't believe that proposed tax on millionaires can realistically do much to close the income gap between the wealthy and everyone else.

Still, he says the whole debate of rich versus poor does raise a legitimate issue of economic fairness.

Even if the system doesn't favor the rich, McEachern says, just the perception of unfairness hurts people.

MCEACHERN: So whether it's real or perceived, as long as people think it's there, it's going to affect their motivation to work, to invest, save, send their kids to school, to do all the things that you do in a market economy to see that you get some share of it.

GRUENDEL: When people look at their lives and don't see the potential for that change, I think it breeds a kind of cynicism, it's strikes at the heart of democracy, because it is a case for a lot of these families that there is a gap and they cannot get out of it.



BILL MOYERS: With me now is a man who has been tracking the political and economic history of American wealth for a long time. Kevin Phillips and I were both young men in Washington in the 60s. We were on different sides but had a mutual interest in politics that reached workaday people. He was the chief political strategist for Richard Nixon's victory in 1968 and wrote the bombshell book on the emerging republican majority. Ten years ago his best-selling book on the politics of rich and poor influenced the 1992 elections. In his new book, WEALTH AND DEMOCRACY, he is writing about how big money and political power are the invisible hand in the hidden story of the American experience. Good to see you again.

KEVIN PHILLIPS: Nice to be here.

BILL MOYERS: You keep referring in WEALTH AND DEMOCRACY" to a plutocracy. What do you mean by that?

KEVIN PHILLIPS: Well, the plutocracy ... and I think we have one now and we didn't, uh, 12 years ago when I wrote THE POLITICS OF RICH AND POOR is when money has ceased just entertaining itself with leveraged buyouts and all the stuff they did in the '80s, and really takes over politics, and takes it over on both sides when money not only talks, money screams. When you start developing philosophies in which giving a check is a First Amendment right. That's incredible. Uh, but what you've got is that this is what money has done. It's produced the fusion of money and government. And that is plutocracy.

BILL MOYERS: But hasn't money always held politics hostage?

KEVIN PHILLIPS: Well, it's usually been very influential.

But what we've seen in the, uh ... the '80s and '90s is that it's taken control of both parties, pretty much taken control of the culture, and controls the whole dynamics of politics. And that is ...

BILL MOYERS: But the si- ...

KEVIN PHILLIPS: ... a plutocracy in a way that we haven't had before, since the gilded age.

BILL MOYERS: But the signers of the Declaration were representatives of America's first and wealthiest families.

KEVIN PHILLIPS: Well, they were, but, you know, a funny thing about that, because they were simultaneously people who were furious with the British. Furious with the British for taxing them, for not letting them make their pig iron into, uh, hammer and spades, for not paying the right amount of money for tobacco.

And if you read what they had to say, it sounds like the American version 100 years earlier of what the people out in the plains said about the bankers in, uh ... in New York and the railroad, uh, owners in Minneapolis. So they were fighters in a way. And Thomas Jefferson pretty much stuck with that. You had a divergence within the founding fathers of those who became, in the American context, pretty conservative, and those who like Jefferson maintained their anger they had against the British economic elites in the United States.

BILL MOYERS: But where is that anger today? Because the ... the two men who spoke most consistently with what you're saying in WEALTH AND DEMOCRACY in 2000, John McCain and Willi- ... Bill Bradley, Senator Bradley, both got defeated in their primaries. And they were the ones who were registering the discontent of which you are ... are writing about. What happened? The peop... that the majority of people don't share your convictions and mine?

KEVIN PHILLIPS: Well, I'm not certain whether they do or they don't. But the ... the key thing in the year 2000 was that if you look at all the psychological profiles of the United States, of the electorate during that period, even though the Nasdaq had started to crash they still thought things were pretty good. The real dive didn't come until after the election when you had the miserable elections stalemate and the sagging economy.

So that basically, you never get one of these reactions against big money until you've had this speculative implosion. And normally I think if we were seeing any kind of debate in Washington, and the Democrats have all kinds of things they could say about the Bush dynasty and Enron, for example, it's mind blowing, but they don't.

BILL MOYERS: Why?

KEVIN PHILLIPS: I think partly because they're so interested in raising money that they can't see their soul in the mirror.

BILL MOYERS: What has happened to the word equality? When you and I were young men in politics it was a common reference in our political discourse. Lyndon Johnson, Richard Nixon, a lot of others too, but you don't hear it in the political lexicon anymore.

KEVIN PHILLIPS: You hear it in twisted ways. There is a view in some conservative circles that it doesn't matter much what concentrations of wealth you have or disparities of income. It's equality of consumption. It's the right to have Nike shoes, to listen to a boom box, to, uh, take a plane ride. And ...

BILL MOYERS: Nothing wrong with that.

KEVIN PHILLIPS: Well, no, but on the other hand, that didn't solve problems in a depression when you had the right to watch a plane fly over Kansas. Or turn on the radio. So you've got these different ledgers that are kept. And people that try to say "consumption is the yardstick" usually have it in mind that democracy is not ... that income differentials are not, uh ... they stand for a different philosophy.

BILL MOYERS: Didn't the word "equality" disappear because the people who believe in inequality won the elections?

KEVIN PHILLIPS: Well, there's a certain truth to that. And going back to the time when we were both in politics on different sides of the aisle, the ... one of the great weaknesses, in my opinion, in liberal politics, was to start talking about social equality in a way that had never really occurred in the United States. People came to this country as immigrants and they ... they suffered all kinds of hardships and, uh, "no Irish need apply" and everything you could name. Nobody ever tried to draw blueprints for bussing the Irish around Boston ...

BILL MOYERS: Mm-hm.

KEVIN PHILLIPS: ... or things like that. And there was a sense that equality in the social sense could be obtained through government that became powerful in the '60s. And in my opinion, that was the beginning of the tending of the idea of equality in the sense of ... of economics. Now, conservatives will still say all that matters is equality of opportunity.

BILL MOYERS: The market will produce the equality.

KEVIN PHILLIPS: Yes, exactly.

BILL MOYERS: You ... you know that I was quite taken with your book "The Politics of Rich and Poor," what, a decade ago?

KEVIN PHILLIPS: 1990.

BILL MOYERS: 1990. In it you told of how the wealthy had made great gains in their power. They had ... are you writing the same thing now? Has it changed quantitatively and qualitatively?

KEVIN PHILLIPS: I think there are two stages, the 18- ... the, uh, 1980s were the first stage in the sense that Ronald Reagan wanted people to have a chance to get rich. He liked entrepreneurs, he liked people who owned 14 department stores or two movie studios. It wasn't for the big old steel companies or anything, but he liked money. And he and Don Regan, the Treasury secretary, created a political culture in which fashion became in, making money became in, paper entrepreneurialism was the key, all the leveraged buyouts. And that was a whole culture of ... people got a lot of money at the top.

But what you got then in the 1990s was, in my opinion, stage two. And this was the technology mania, and the rise of the securities markets, taking technology and making this incredible bubble out of it. And a new crowd of people got rich. Plenty of the old people, but a whole lot of new people. New people who tended to have a, uh ... a more liberal politics in many cases, to name Internet companies, things like Yahoo! and AskJeeves, and what have you.

If you look at the list of new money in the, uh, Forbes 400 say in 199- ... 1998 or 1999, when the Internet, uh, crowd was coming in big time, we've got an awful lot of Democrats. And the Democratic Party has in its own way started to be a party of a different type of wealth. The Republicans have the smoke stacks and the polluters and the ranchers and the oil companies, and the Democrats have a lot of the communications media, a lot of biotechnology, a lot of the coming stuff ...

So what we've got are two sets of people in Washington who basically because of the whole demand of financing campaigns go to people with money. They go to different sets of money and you've sort of got what you had in politics before the Civil War: the Democratic Party, that basically was in with a southern plantation aristocracy, and Republicans who are in with the merging industry. Nobody was for the little guy.

BILL MOYERS: What's the ordinary Joe and Jane to do? I mean, the guys running these cameras, uh, working here, whom you've met, they can't write big checks to either political party or political candidates, and yet it's a struggle not to leave people despairing today when they read an analysis such as "Wealth and Democracy." What are the average folks to do?

KEVIN PHILLIPS: Well, one thing I think they have to do is they really have to say on certain issues, which are not strictly party issues, we've just got to mobilize on the issues, whether it's campaign finance or other things like that. But secondarily they've got to work to make the party system make a difference. You can't have two parties that represent different flavors of great wealth and expect not to see all these weaknesses continue to grow.

BILL MOYERS: But you've already said that both parties spend all their time raising money. And they don't listen to the people running the cameras. They listen to the people writing the checks.

KEVIN PHILLIPS: Yeah, well, some of the time they do, because you keep reading about votes in Congress periodically, where these outrageous proposals, be they tax or trade or other things, they only make it through by one, two, three votes. People are standing there twisting arms of Presidents, giving them six post offices and three favors.

Now, if there wasn't some responsiveness to public opinion and a sense that things have gone too far, that wouldn't happen. So the trick is to mobilize somehow or other institutions in this political culture that will take those issues on which Congress ... some of them would like to be made to vote against their contributors. And, you know, I'm ... I'm not sure how to do it. I think ...

BILL MOYERS: It took a rich man, Ross Perot, to make it happen in any significant, uh, manifestation ... eight years ago, ten years ago.

KEVIN PHILLIPS: But see, part of the thing in ... in the United States, is that the minority of rich people are usually on the side of trying to make America work like America. You had in the last election, in the three people who were running sort of as populist, John McCain, millionaire, son and grandson of four-star admirals, uh, Bill Bradley, multi-millionaire, former basketball player, even Ralph Nader's got three or four million dollars worth of investments. So all kinds of people go against what should be their interest financially because of what they think is the right thing to do. That's really something to build on.

BILL MOYERS: What's been the biggest change? You ... I was in Washington in the '60s, you came right after, helped elect Richard Nixon, we were both in our 30's then, very young 30's, what's been the biggest change in Washington since we were young men there?

KEVIN PHILLIPS: I think the entrenchment of money in ways you can't even begin to count. It used to be that when a, uh, new wave politically came to Washington they swept it out. And that was certainly true with Lincoln, it was certainly true with FDR. Uh, it couldn't happen even in the '60s, in my opinion. There's no way to sweep now. The whole structure was just a pyramid of ... of economic influence mongering.

BILL MOYERS: Do you think the new McCain Feingold ban on soft money will have any positive impact on this?

KEVIN PHILLIPS: Oh, it'll have some positive impact, but in many ways, it's gonna be another version of the lawyers and accountants full employment act.

BILL MOYERS: So what do we do?

KEVIN PHILLIPS: Keep fighting. I think there are signs that it's turning now. To me one of the most important milestones will be if people, and I include the media here, have the courage to document and put on the front page what they won't really touch now, which is ...

BILL MOYERS: Which is?

KEVIN PHILLIPS: All the examples of the Bush family's role in the rise of Enron. Here, we're running around, we're blaming these accountants, these, uh ... tricksters that were in Enron, but George W. and George H.W., his father, were very much involved in the whole rise of Enron's influence and power in this country. But you ... you don't see that. People in the press have a lot of trouble touching these issues right where the rubber hits the road.

BILL MOYERS: Well, when you've got anchors making eight, nine, ten million dollars a year, when you've got, uh, a handful of huge media corporations owning over half of the outlets in this country, do you expect much populism from those people?

KEVIN PHILLIPS: No. And that's the fundamental problem. How do you get dynasties to talk about other dynasties? I think it's a real difficulty. Unfortunately, that means that some of us have to start talking about stuff we'd rather not do all the time because if you don't make a lot of friends by doing it ... it's tough, but a dynasty is a dynasty is a dynasty and these problems are there, and this incredible amount of money is ... is just staring this country's historical role in the face

BILL MOYERS: How do you explain that the pro-wealth policies of the right, the conservatives, have endured so much support among working Americans and low income Americans?

KEVIN PHILLIPS: Well, all I can say is if I were a Democratic senator, I would go on and make a speech that might remind Democrats of stuff they haven't heard in a long time. You get professors who are dedicated liberals and they go on and they make these speeches and nobody pays any attention. You have to basically go in there and do a number. You have to go in there and just stand there and describe who supports somebody, who is paid for and who has done this, that and the other.

If the Democrats wanted to take all these issues out and run 'em up the flagpole, there is still plenty of people ready to salute. That's why we have some of these close votes. But you've got to be willing to do it. And I understand why a lot of them don't want to do it. But, you know, who's gonna do it? Ralph Nader couldn't do it. His friends dropped him when he talked about all of this.

BILL MOYERS: Are you going to join the Democratic Party?

KEVIN PHILLIPS: No, I don't think the Democrats have done anything that I should say, uh, warrants, uh ... but I'm certainly and independent more than a Republican at this point. John McCain is the one lifeline and one of his aides left because he didn't seem to want to carry the flag and that's a big question mark.

BILL MOYERS: Thank you very much, Kevin Phillips.

KEVIN PHILLIPS: Thank you.

BILL MOYERS: Thank you for WEALTH AND DEMOCRACY.

KEVIN PHILLIPS: Thanks.




MOYERS: The class system is the great live wire in America's political discourse.

Touch it and you're toast.

So politicians won't mention it, schools don't teach it, and the mass media... Well, mostly we just revel in it, in no small part because we're not at the bottom of the pile.

You can't switch on the TV or pick up a popular magazine without seeing and envying the lifestyles of the rich and famous.

But every now and then, the lens does focus on the taboo of class.

The filmmakers Louis Alvarez and Andrew Kolker took a look at how income defines the life and lifestyle of people across America.

They called their film: PEOPLE LIKE US. Here's an excerpt.

ANNOUNCER: On behalf of Mercedes Benz U.S.A. Welcome to the Sixth Annual Mercedes Benz Polo Challenge at the Bridgehampton Polo Club.

NARRATOR: In THE GREAT GATSBY, F. Scott Fitzgerald told the story of a gangster who threw lavish parties in order to be accepted by New York society.

80 years later, the game of social advancement is still being fought on the green lawns of New York's summer colony as new money stakes its claim to social position.

WOMAN AT PARTY: It's a mix.

MAN WITH GLASSES: Yeah, it's a mix.

WOMAN: Fashion, age...

MAN: I don't think everyone here is a Rockefeller.

BLONDE WOMAN: So far, I've seen Francesco Scavullo, the famous photographer that everybody knows, and also, David Hasselhoff from Baywatch.

TALL MAN: Well, I would say, that I have been able to and have access to the best of all things and people from around here certainly I think are from the same kind of a level and a group, in a way, in a good way. You work for what you attain, so it's a nice feeling.

STEVEN GAINES, AUTHOR: There's this thing on Wall Street called the wealth effect where you immediately get spoiled, you immediately adopt a sense of entitlement, there's this feeling of, I'm very rich. I'm out here in my four million dollar home. I want instant attention, I want you to pet me and caress me and be terrific to me, even though you're a nineteen year old kid working his way through college at the bagel store. So, if you want to see class, go to the bagel store in the morning when the guys pull up in their porches and push around the poor kid behind the counter.

DAN RODRICKS: The rich rule. The rich rule. We have such a concentration of wealth in America over the last ten years. It's phenomenal. It's amazing anyone else has any money. Anybody here got any money. It's amazing that any of us have any other money, except that small group that's way up at the top, extremely exclusive, making not millions but billions now.

NARRATOR: So, when you've made enough money to last you ten lifetimes, then what? Now you're ready to make your assault on high society. And the proper prescription for getting your picture into the right papers can only be filled by the likes of gossip columnist extraordinaire, R. Couri Hay.

COURI HAY: I know we must talk to the caterer because, you know, the rich like to eat too and it's very important what we feed them. So here's the living room and again I really want to emphasize that we're in somebody's house. And you just met Francesco and Marina Galesi, she is actually a princess, a European princess who married an American and lost the title so now she is Mrs. Galesi. But, let's never forget she's still a princess. So, it makes sense that a princess would have a castle and her husband just has a swimming pool only this is a little unusual because this swimming pool has got sharks in it. So, if I trip and I go in, I may not survive. Do we have champagne, boys?

BOYS: Yes.

COURI HAY: Thank God, because you know, it's never a party unless there's champagne and that's why you'll see bars everywhere because people still need to drink.

COURI HAY: You can buy yourself a wing at an important museum. There's not a college that won't accept your new library, but money does not necessarily buy you automatic entree to the social upper reaches of society. It just doesn't work. It can get you in, sometimes, but at the same time it won't get you accepted.

DAVID COLUMBIA: Marty Bregman, the producer who's produced a lot of Robert DeNiro films is here with his wife Cornelia. Um, I saw Kimberly Rockefeller who's married to one of the grandsons of Nelson Rockefeller.

COURI HAY: The ever glamorous Kimberly Rockefeller. So, what brings you out tonight?

KIMBERLY ROCKEFELLER: Hello.

COURI HAY: Well, Amanda is actually the great-granddaughter of William Randolph Hearst. So, have you spent a lot of time in the castle?

AMANDA: Yeah.

COURI HAY: So, is it haunted or-

COURI HAY: Charles Evans, the producer. What are you buying? Are you buying anything? These are two world class shoppers if I've ever seen them.

COURI HAY: What's it like to be a "It" girl. You've always been "It" to me. I mean I've known little Nikki Hilton when she was less of this and more- a little bit smaller. But, does this change your life? The publicity, the press...

DAVID PATRICK COLUMBIA, SOCIETY COLUMNIST: Society is really not at all dissimilar to high school. It's the same thing. It's wanting to belong, it's wanting to hang on to a group that you feel is the privileged group, because- maybe because simply they're the coolest and that is it and it's nothing else. And people invest themselves in being accepted by these people, or trying to be accepted by these people, or not being accepted by these people because they say they don't care about it. But everybody cares about it because it's simply a matter of feeling like you belong and that in a way is an affirmation of your existence.

COURI HAY: What makes it a high class event? Is it just the names- the Rockefellers and the Kennedys and the Hearsts and the Roosevelts and the Judelsons and the Weils? What makes it a classy event?

WOMAN: Well, my father always said that if something's classy you don't have to call it classy. That it speaks for itself. So you try to never say that something's classy...

COURI HAY: Well said. There's actually a recipe I can tell you for you to become socially acceptable. You have to go to the right pre-school. It starts that young. If you're a girl, you've been going to the Bathing Corporation in the summer, you've been playing golf at the Meadow, you've been playing tennis at the Maidstone. These private clubs are places to meet your peer group. You're going to need have the grand tour several times. You're probably going to want to take your junior year abroad, perhaps in France, at the Sorbonne. You're going to want to learn a second language. You put it all together and theoretically some guy pops the question and gives you a ring from Harry Winston and you have to plan your big wedding. Once you get married your going to want to have children. Now, all of a sudden you have these children you better start thinking right away, what about their pre-school, what about their nursery school, what about their grammar school, what about their college. The whole thing is going to repeat itself and...

DAVID PATRICK COLUMBIA: If you have the money you can go anywhere you want and if you have the class, which is a very tricky thing as we know, you can sustain it and actually develop something and build something. Just as, once upon a time the Vanderbilts were nouveau, really, truly nouveau and garishly nouveau, there are those people here tonight, I don't know who they are necessarily, who have that potential in their future of being, what we would now call nouveau, but one day because of their own cleverness and charm and money, they will be able to build a name, like Vanderbilt. Except the name might be, Petrowski, which it wouldn't have been a hundred years ago. That's also the great thing about the American dream...

COURI HAY: I like what Oscar Wilde said: You know, society is a terrible bore but it's worse not to be invited.





NARRATOR: And now a look at the stories coming up on NPR radio this weekend.

SCOTT SIMON: Hi, I'm Scott Simon.

Tomorrow morning on WEEKEND EDITION from NPR News, Robert Carow talks about Lyndon Johnson's Senate years, the cloak room bully who became a civil rights champion.

Also, looking for a few good men and women who can add and subtract, enlisting mathematicians on the war on terror.

Ask we'll read through a new book of children's poems, THE FROG WORE RED SUSPENDERS.

You can find your local public station on our web site, npr.org.

Hope you're with us tomorrow.



MOYERS: "Of all the forms of inequality, injustice in health care is the most shocking and inhumane."

Those were the words of Martin Luther King, Jr. He should see the yawning abyss now. In every other democratic and industrial nation of the west, health care is a human right.

Here, it is a function of the market.

And that market doesn't serve some 39 million to 40 million Americans who can't afford to buy into it.

And consider this nugget: from 1982 to 1998, the percentage of workers with full employer-paid health coverage dropped from 46% to 27%.

And now it's predicted health care rates will rise by double digits next year.

In response, a new debate is stirring in one state that could be a sign of things to come.

Here's our report from Maine, by NOW'S William Brangham and NPR's Julie Rovner.

JULIE ROVNER: Portland, Maine is the urban center of this decidedly rural Northeastern state. The motto here is "Vacation Land" because Maine is a magnet for tens of thousands of summertime tourists.

But Maine is notable these days for more than its lobsters and lighthouses — this state in some ways offers a glimpse of America's future: an older population, and an economy straining under the momentous costs of medical care.

The shoemaking and canning industries that helped build this state dwindled years ago. Today the state's economy is dominated by small businesses. Ninety percent of the companies here have fewer than 20 employees.

LT's Incorporated typifies this state's economy. It's a screenprinting business in downtown Portland.

K.C. HUGHES, OWNER LT'S INCORPORATED: I think the apparel is really our biggest part of the business.

ROVNER: How big a company are you?

K.C. HUGHES: We have 15 employees, most of the year, and during the summer we have as many as 20.

ROVNER: LT'S is also emblematic of something else that distinguishes Maine — the crushing cost of health insurance.

K.C. HUGHES: We've just seen just incredible rate increases. I think it was 12 percent, 12 percent, and then this year we're looking at a 38 percent increase.

Some companies around us have seen even bigger than 40 percent increases. So — you know — how do you — how do you budget for that if you didn't know it was coming?

ROVNER: To hang onto the policy, Hughes has had to pass on some of these increases to his employees. For a family, the cost is $800 a month, for an individual, it's $300. To many, these costs are simply too much, and they've given up their coverage.

K.C. HUGHES: I know people that can't get insurance, they just can't get it — they can't afford it. They're looking at a $1200 bill a month for health insurance cause they're an individual policy. And I don't — I just can't imagine that. That's like another mortgage, it's an additional mortgage, and how do people pay that?

ROVNER: Health insurance is now the company's third largest expense behind payroll and the mortgage. The monthly bill is over $15,000.

K.C. HUGHES: I just don't even want to look at these numbers. It's just — it's death defying to stay in business. I don't know how people do it. And it will come to a point where we have to just draw the line and say, "We can't do it anymore." Unless something radically changes.

ROVNER: Maine's the first state to see the sunrise each morning. Some say Maine could also be the first state to see something far more ominous, a health insurance meltdown.

JAY HOUGHTON, NURSE, PORTLAND MAINE: The cost of medical care is skyrocketing totally out of control. And that is the bottom line.

ROVNER: Jay Houghton is a nurse at Mercy Hospital in Portland, Maine. Every day, she sees fresh evidence of a system in crisis.

JAY HOUGHTON: Nobody is happy where the situation is. Nobody is happy. I don't think the insurance companies are happy with the situation. Certainly, the patients aren't, certainly the doctors aren't. The hospitals are in dire straits.

Good morning, just going to take your vital signs.

ROVNER: Dan and Carolyn Perkins know just how critical health insurance is.

CAROLYN PERKINS: I have an HMO. It's Anthem Blue Cross Blue Shield Maine Partners.

DAN PERKINS: We can't afford to be without insurance ... as expensive as it seems to be for us-we're grateful that we do have it.

ROVNER: Carolyn's surgery today could easily run into the thousands of dollars. But as vital as it is to them, the $300 monthly premium is straining the family's budget.

DAN PERKINS: I can't stand up and say no, I'm not going to pay my premium or I'm not going to give you this money this week because I have to go grocery shopping. You know, that's--it's not an option. We have no options. They say you pay this amount, and we have to pay that amount. Or you will lose your insurance.

When you have no choice, you have no choice. But certainly everyone likes to have an option. And right now our options seem very, very few.

JAY HOUGHTON: It's getting to be that really only rich people are going to be able to afford health insurance. Now, Maine is not a rich state. We are a relatively poor state. And there's really very few families that can afford that kind of money.

ROVNER: Maine's older population makes the state especially vulnerable to the spiking cost of health care. The elderly need more of the medicine's big ticket items — prescription drugs, high tech procedures, and long hospitalizations.

And Maine's small population — just over a million people — is spread across a state that the rest of New England would fit into. That makes delivering health care here less efficient and more costly.

Insurance companies find it hard to make a profit in this state, and many have already left. Those that remain are constantly raising their premiums. But when rates go up, more people drop out. These uninsured strain the system even more, which forces costs up yet again.

JAY HOUGHTON; When you're uninsured you don't go to the doctor, and you go to the emergency room. Now, if anybody's been to the emergency room you know it is the most expensive form of healthcare there is. I had to go once many years ago just for something minor and I--the bills were astronomical. They were astronomical.

ROVNER: Fed up with the current system, Houghton joined a grassroots group that put a referendum on Portland's ballot asking the state to study what's called a single payer system - it's very similar to what Canada does — everyone there is covered by the government, but it's paid for through higher taxes.

JAY HOUGHTON: A single payer system would mean that all that money would go directly into healthcare and not into administrative costs, not into lobbying, not into lawyers' fees, not into physicians' groups or anything else. It would just go directly into paying the bills for healthcare.

ROVNER: It was a non-binding referendum.

TV ADS: Higher Taxes, Fewer Choices.

ROVNER: But that didn't stop major insurers from waging an air war to squash it.

TELEVISION AD: We won't have the choices we have now. What doctor am I gonna see? It's a horrible idea·

ROVNER: Dozens of ads denounced the referendum as a recipe for higher taxes and restricted access to doctors. Maine's biggest insurance company, Anthem Blue Cross Blue Shield, poured almost $400,000 into the effort — outspending Houghton's group by almost 20-to-1.

TRISH RILEY: Ads started to come on TV opposing it. Largely supported by insurers and others. And I think in Maine that didn't feel fair. The same insurers that were before the — the rate setting mechanisms of the state to get premium increases, were having money available to oppose a referendum that most people didn't even know was gonna be on the ballot. And I think it just, Maine's a state where fairness matters. It's not fair that some people have to pay this much for their health care and they didn't think that was fair.

ROVNER: Despite the intense campaign, the referendum passed - albeit by a very slim margin — 52 to 48.

Maine probably can't implement a full-fledged single payer system even if it wanted to — a federal law blocks states from regulating many employer health plans. But people here fully expect the state will do something to ensure that every citizen who wants health insurance can get it.

Maine's legislature has a feisty streak of health care activism — its latest cost control effort was trying to force pharmaceutical companies to lower prices statewide — that foray landed them in federal court.

But Maine has also become a symbol of the growing agitation in America over the state of our healthcare system — and of the debate about how to best control the spiraling cost of medicine.

JIM PARKER, VICE PRESIDENT OF ANTHEM BLUE CROSS, BLUE SHIELD: Medical technology has given us capabilities within the health care field, you know, that three years, five years ago, certainly ten years ago were unheard of and never thought of.

ROVNER: Jim Parker is Vice President of Anthem Blue Cross, Blue Shield. He sees spiraling costs as a real problem, but says they're the result of us getting just what we asked for: the best that modern medicine has to offer.

JIM PARKER: The pharmaceutical industry has over -- 400 prescriptions in the patent pipeline, many of which, you know, hold great promise for--for those in need of them. And so, we're in this awkward time in which we've created a — where we've painted a medical opportunity that perhaps could be beyond society's stomach for paying for it.

ROVNER: The undeniable benefits of this medical and pharmaceutical boom come with one considerable drawback — nearly forty million Americans who can't afford to pay for them.

And so the debate in Maine really is the nation's debate — who's going to be responsible for balancing what we want out of medicine with what we're willing to pay for?

HOWARD BUCKLEY, PRESIDENT OF MERCY HOSPITAL: Everybody says oh, I'm sure we can fix it — you know we'll cut this a little — we'll cut a position here -position there. And I'm saying you know it just can't be done. That it is time for a drastic overhaul of the system.

ROVNER: Howard Buckley is a rather unlikely convert to government intervention in health care. He's the President of Mercy Hospital, a registered Republican, and a forty-year veteran of profit-driven healthcare. But he changed his mind when came to the conclusion that the interests of business and the interests of medicine had become incompatible.

HOWARD BUCKLEY: If you're a managed care company, you make your money by denying coverage to patients. If you do that, you make money. If you slow the payment process down, you make money. The incentives are very perverse and certainly are not in the best interests of the patient.

The whole concentration has been on the business aspects of providing care and not on what the true calling was of providing a service to people who are sick and are in need.

JAY HOUGHTON: We believe that healthcare is a human right for the public good. Something that touches everybody's lives, but that they cannot handle for themselves. For instance, our public transportation, police and fire protection, Coast Guard, that kind of thing--all of these things directly touch our lives, but we can't handle each on our own.

So, it can't be run like a business. Healthcare is not the same as an automobile or a computer. And we really feel that the whole healthcare system has got to be removed from the marketplace.

MARK CENCI, HEAD OF Maine'S LIBERTARIAN PARTY: You can't say that market rules like supply and demand have no bearing whatsoever on healthcare. The problem with a universal healthcare system is that the demand is infinite. But the supply has got to be limited.

ROVNER: Geologist Mark Cenci is the head of Maine's Libertarian Party. He agrees the system is broken, but rather than the government stepping in, he thinks that medicine needs more of the discipline only the marketplace can provide.

MARK CENCI: And rather than take health care completely away from market forces, which would happen with a government-run program, tax-funded, we need to at least keep some crucial market forces at play in health care markets.

PRESIDENT BUSH (FROM TAPE): So here's what I propose. I propose we give workers more choice. I propose we reform the system-

ROVNER: This is the hot idea in Washington DC today — letting individuals spend their own money in the medical marketplace.

PRESIDENT BUSH (FROM TAPE): To make the system more individualized, by creating personal health accounts...

ROVNER: Conservatives say if we really knew how much things cost, we'd rein in our spending and force healthcare providers to lower their prices.

PRESIDENT BUSH (FROM TAPE): The money is your money. It's your money in the health account, not the government's money. And you can use it for whatever health care need that arises. If you don't use it, it's yours to keep.

ROVNER: The ideas are simple, if revolutionary. Instead of providing comprehensive insurance, employers would provide workers with policies that cover only the most extraordinary costs — and give them a set number of dollars to spend on more routine care.

MARK CENCI: I think that if you're — faced with a situation of where you, you are going to be spending your own money and not assuming that everyone else is paying for your health care needs, that you will become more of an active consumer — just like every other aspect of our lives, be it a pur — car purchase or computer purchase or clothes or food — yes, you will be more vigilant, and you will be looking for the best products at the best prices.

ROVNER: The goal is the same — make sure everyone can get the care they need. Policy analyst — and Maine resident — Trish Riley says Mainers are fed up enough to do something dramatic.

TRISH RILEY: I think people in Maine want universal coverage. We live in the shadow of Canada. We certainly know the problems of access in Canada. But there's something that seems right to people here. That because you live in a state, everybody should get access to the same kind of health care.

ROVNER: Regardless of what reform measure you propose, everyone says they're in favor of better, cheaper medicine for all Americans. But no one ever seems to reach agreement on a foolproof way to fix the system.

TRISH RILEY: I think what's kept us all over the country from dealing with this issue isn't lack of good ideas. It isn't lack of good people. It's lack of will. We're just afraid to make the commitment 'cause it's big change and it's big money.

ROVNER: The real question is whether what's stirring in Maine is just a product of this state's unique circumstances, or whether this debate will spread to the rest of the nation. If it does, then we could face a return to the bruising fight that embroiled the country a decade ago.





MOYERS: That was Julie Rovner reporting from Maine. Here she is now in the studio with me. You've heard her many times as NPR's health policy correspondent, and many of us know her as an expert on health care in her own right. She's the author of the book HEALTH CARE POLITICS AND POLICY A TO Z. Thanks for joining me tonight.

ROVNER: Nice to be here.

MOYERS: What do you think, will there be a bruising debate again in Washington?

ROVNER: Seems to be one every 10 or 5 years so, there will likely be some major health care debate in the next few years. Well, there's a lot of things in health care that are very complicated. This isn't one of them. It's pretty simple.

We're getting older as a society and older people consume more health care. And we're developing more things that we can do. I mean, everyone says what a great system the United States...or, what great health care we have in the United States.

And we can do...not only can we do wonderful things, but we can do wonderful things that are safer. And that's important to the health cost equation, because as things get safer and so the risk benefit goes down, there's more of a benefit and less of a risk, you can do more things and therefore it runs up the cost of health care.

MOYERS: But even with all of those choices, can't we do a better job of controlling the cost?

ROVNER: Well, certainly we've talked about it for years, for generations in fact. This is a recurrent theme in American social policy history. We've just never been able to resolve what it is that we want to do.

MOYERS: Right now the market rations health care. But that means millions of people cannot buy into the market. Can the system sustain itself when so many people are outside it?

ROVNER: Well, that's certainly the big question and that's a problem that we really haven't faced to this extent before.

With so many people out of insurance, up to about 40 million, it's getting to be a bigger and bigger strain on the system.

MOYERS: Who are those 40 million, you're around the country, who are they?

ROVNER: Most of the 40 million people actually have jobs, these are not people on welfare, these are not the very poor.

Most of these people are not in poverty and most have either worked full-time or have a full-time work near the family, they're people in low wage jobs, in service jobs, in small businesses who may be relatively well paid but whose businesses don't offer health insurance. Those are largely the uninsured.

MOYERS: These are then people with no voice, no representation?

ROVNER: Well, some of them do. A lot of these people though are struggling to live day to day. These are people with no health insurance and many of them with if not very low incomes low enough incomes that it's hard to keep food on the table. And really they work two, sometimes three jobs. They don't have a lot of time to be off lobbying their legislators to help them get health insurance.

MOYERS: Here's a true story I heard about just yesterday. A young woman turns up with ovarian cancer. She goes to the doctor. He says he won't take her because she doesn't have the right kind of coverage, and he doesn't want to take this on. So she has to go and find coverage. She gets it, but she gets lesser coverage. I mean, that happens a lot, doesn't it?

ROVNER: It does. I mean, there's certainly study after study that suggests that while the uninsured do get care, if you get run over by a bus in the middle of the street, you're going to get taken to a hospital, you're going to get taken care of.

But people who don't have insurance get less good care. They don't get as much preventive care, so that when they get sick things get found later when they're harder to cure.

They don't get the kind of continuous care that's better. They don't develop relationships with doctors that can help keep them healthy. So yes they get care but it's not optimal care by any means.

MOYERS: I don't know if your reporting has turned this up, the answer to this question, but every industrialized democracy in the West, and some developing countries, treat health care as a human right. We treat it as a function of the market. Why can't we move toward what so many others embrace?

ROVNER: I think because we've had this ongoing debate really over the last 50 years about which way to go. Everybody agrees that people should have health insurance, that people should be able to have access to health care, to good coverage.

But we can't resolve this, every other country managed to resolve this most of them years ago, some of them more recently. But there is this continuing standoff, a policy standoff in Washington, to some extent in the states, too, you've really got people dug in on whether to get the government more out of health care or whether to get the government more into health care.

MOYERS: You mentioned earlier that some 10 or 12 years ago there was a great outrage over health care, in fact, it influenced the outcome of the '92 election, in one sense, Bill Clinton was elected because he exploited that issue and said he was going to do something about it. What's happened to that outrage in the last 10 years?

ROVNER: Well, I think the outrage has gone away. What really happened was in about 1989, 1990, really before Bill Clinton even came to this issue, we saw the same kind of skyrocketing health costs that we're seeing right now. And what happened was that companies moved to managed care to try to get a handle on cost.

And I think the combination of managed care and the threat of universal health coverage helped dampen that health care inflation for several years. Then what happened is that health care inflation has started to come back in the mid to late 1990s.

At that point we were in a booming economy with a tight labor market. And for most people who had insurance, their employers shielded them from those increases. They needed to be able to get workers. So they said, it's going up 10 percent a year, we're going to swallow that. You're not going to feel it.

I think that's just now beginning to change as the economy is doing not quite so well. We're seeing more of these costs being passed on to workers. We're starting to see strikes again over health benefits. It's sort of back to where we were 10 or 11 or 12 years ago.

People are starting to feel the pain of these increasing health costs. And what's going to happen as the costs go up as we've seen in Maine, employers are going to just to have...have to stop offering insurance at all.

MOYERS: Do you see in your reporting the evidence of the great consequences of the inequalities in health care?

ROVNER: Yes, I think there's...what I'm starting to see is evidence that the system is starting to break down again. As I say, I think most people don't feel it yet. They're not feeling it in their pocketbooks, they're not feeling it to a great extent when they try to go to the doctor or to the hospital.

But the level of complaints from the health care providers, from the people who actually give the care, is getting louder once again. It's sort of ominously coming over the ridge.

MOYERS: How does it play out, this inequality? Who gets really hurt?

ROVNER: Well, I think obviously the people who don't have insurance. The people who have insurance that's not very good, and there are a lot of people who have insurance that just isn't very generous or doesn't cover very much...

People who need care, and this growing gap between what we can do and what we can afford to do, even on a personal level. If you need something that costs $20,000, or $30,000, or $40,000, for the average American, if your insurance isn't going to cover it, that's just unreachable.

MOYERS: I mean, some of those families in Maine, how do they afford $1,000 a month, $800 a month?

ROVNER: Well, they're giving up everything else.

MOYERS: Thank you, Julie Rovner, for your reporting from Maine, and for being here tonight.

ROVNER: Thank you.


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