Now let's see if we have this straight.
Medicare's hospital trust fund is facing bankruptcy by 2002, and Republicans are unhappy that the Clinton administration isn't doing more to shore up the program's finances.
House Speaker Newt Gingrich (R-Ga.) sent a letter to President Clinton demanding that Medicare trustees come up with a recommendation by May 15 on how to keep the program solvent. Senate Majority Leader Bob Dole (R-Kan.) blasted administration plans for a commission to study the problem as a "complete abdication of responsibility."
So what was the first thing the GOP-controlled House did to Medicare? It rolled back a provision of the 1993 Clinton budget-reduction package that increased to 85% from 50% the portion of benefits on which the wealthiest Social Security recipients pay income taxes. Because those revenues are earmarked for the Medicare trust fund, the move would put the hospital insurance trust fund $49 billion deeper in the hole over the next 10 years. The House action, taken as part of its $189 billion tax-cut bill, could hasten Medicare's insolvency by a year.
Prompt action is needed to put the Medicare program on sound financial footing, but Congress still faces many of the minefields that torpedoed the Clinton healthcare reform plan. Expanding Medicare managed care makes sense, but seniors fear their choices will be restricted, as have those of other Americans being swept by their employers into managed-care plans.
It's well and good for Gingrich to say Medicare must be rethought "from the ground up." But he's fooling the elderly if they think they'll get more choices and not pay more for it.
Gingrich wisely has backed off plans to use reductions in the $195 billion Medicare program to balance the federal budget and reduce the deficit. To do otherwise makes Republicans ripe for charges that they are squeezing Medicare to pay for tax cuts for the well-to-do.
But it's unfair for Congress to ratchet back providers' fees by $250 billion over seven years without finding a way to encourage users of the system to select more cost-effective care. Affluent beneficiaries need to pay more. And with a swelling crop of baby boomers soon to enroll in Medicare, it's time to seriously consider raising the enrollment age.
As the debate progresses, physicians and healthcare executives need to make Congress understand that hospitals are being asked to sacrifice too much. They already face a crunch caused by the $56 billion in Medicare cuts that Clinton and Congress imposed in 1993. Furthermore, data from the Prospective Payment Assessment Commission show managed care is eroding providers' ability to shift costs.
Finally, self-reform efforts held hospital cost increases at their lowest rate in a decade during 1994.
Spending cuts should take into account demographic changes related to baby boomers who will turn 65 in 2020 and the need to share more fairly the burden of making the system financially responsible.