The American Hospital Association is discussing with its policymaking boards the possibility of backing an increase in personal income or payroll taxes to fund Medicare, which soon must accommodate aging baby boomers.
The AHA's deliberations come at a time when Washington lawmakers are proposing a variety of federal tax cuts because of the booming economy and its positive impact on the federal budget.
According to the latest government estimate, the Medicare Part A trust fund will be solvent at least until the year 2010, nine years later than the previous estimate (Oct. 6, 1997, p. 12).
Discussions to expand Medicare financing also are occurring against the backdrop of record hospital profits overall and high profits specifically from treating Medicare inpatients (Jan. 19, p. 3).
Those factors likely would make a tax-hike proposal to finance increased Medicare spending a tough sell on Capitol Hill.
The tax-hike plan got an airing before the AHA's nine regional policy boards, which met in October in Chicago to discuss that and other possible AHA policies. The AHA wanted to get a sense of its membership's views on several ideas likely to come before a new 17-member congressional Medicare commission. The panel, created by the recently enacted balanced-budget law, is charged with looking at the long-term solvency of Medicare. It hasn't released a schedule of meetings yet.
How the AHA ultimately would come down on any tax-increase proposal has yet to be determined.
"There is a split" in the membership, said James Bentley, senior vice president for strategic policy planning at the association. "(There are) some people who say we are ultimately going to have to do that. There are others who say, yes, we may have to do that, but until the country is persuaded that we're as efficient as possible it will just add to the public relations problem of greedy providers."
Raising someone else's taxes to pay for Medicare could be an extremely touchy issue.
For example, the American Association of Retired Persons didn't get a spot on the Medicare commission because it wouldn't promise House Speaker Newt Gingrich (R-Ga.) that it wouldn't recommend a tax hike to finance a bigger Medicare program.
"Our view was that there should be no precondition; we should look at everything," explained John Rother, legislative director for the AARP.
Even those members who sit on the commission are divided.
Rep. Greg Ganske (R-Iowa), a Gingrich appointee, said an increase in the Medicare payroll tax is unlikely.
"The commission will look at every suggestion, but my feeling is we have been given a goal to come up with solutions that make the program better, not to unduly burden a smaller work force with higher taxes," he said.
But Stuart Altman, who was appointed to the commission by President Clinton, said a tax increase can't be immediately dismissed. A professor at Brandeis University in Massachusetts, Altman is the former chairman of the Prospective Payment Assessment Commission.
"I don't think it's realistic to seriously think about preserving Medicare without thinking about some types of tax increases," he said.
Bentley cautioned that the floating of an idea before the AHA's regional policy boards doesn't mean it will wind up as official association policy.
E. George Middleton Jr., chairman of Norfolk, Va.-based Sentara Health System, was at the October meeting.
"As I recall, most of the people were primarily concerned with getting more funding," Middleton said. "As I recall, the idea of raising income taxes was somewhat well received."
According to policy board members, the AHA aired other alternatives likely to be considered by the Medicare commission, including enrolling low-income seniors in Medicaid instead of Medicare, raising the eligibility age for Medicare and letting early retirees buy into the program.
-With Eric Weissenstein