The politics of Social Security, Medicare

With the presidential campaign going full tilt, a new government report on a big national problem is usually followed by volleys of rhetoric from the candidates. But on Tuesday, when the annual report on the precarious state of Medicare and Social Security came out, the reaction was not exactly deafening.

The two programs on which millions of elderly Americans depend are apparently just too hot to handle -- especially since any realistic solution is likely to involve a politically unpalatable mix of higher taxes and lower benefits.

As a result, Sen. John McCain of Arizona, the presumed Republican presidential nominee, had little to say when the latest numbers were released projecting Medicare going into the red by 2019 and Social Security following in 2041. The Democratic contenders, Sens. Barack Obama of Illinois and Hillary Rodham Clinton of New York, also sidestepped the issue.

“Everybody knows that there are a couple of 800-pound gorillas under the rug, but nobody wants to talk about them because that is not the route to the Oval Office,” said economist Robert D. Reischauer, president of the Urban Institute public policy center. “The situation is unsustainable in the long run, but the long run is in the future, and our political system operates very much in the present.”

Yet baby boomers will start retiring and signing up for Medicare in 2011 -- during the next president’s first term. And the program faces double jeopardy from rapidly rising healthcare costs and an aging society. Indeed, the trustees’ report released Tuesday showed that Medicare spending will surpass Social Security in 2028, and grow to almost double the cost of the pension program in 2082.

Of the three candidates, McCain is running as the most fiscally conservative. He criticized the Medicare prescription benefit when it was created in 2003, saying that Congress and President Bush failed to provide for the long-term cost.

Candidate McCain has called benefit programs “unsustainable” and promised to work with Democrats to find solutions. But he has not laid out his own ideas in detail. And he certainly has not indicated a willingness to consider tax increases.

But tax increases will likely have to be part of any solution.

A president “can’t take anything off the table,” said David M. Walker, former head of the congressional Government Accountability Office and a leading advocate of reforming entitlements, as the benefit programs are known.

“You can’t tell people, ‘I’ll never change Social Security and Medicare,’ or ‘I’ll never raise taxes,’ ” Walker said. “If you take things off the table, it significantly undercuts the ability to get a deal.”

All three candidates agree that Medicare’s problems are part of the larger dilemma of rising healthcare costs, and that they have similar kinds of proposals to try to rein them in without tax increases or benefit cuts.

These include better coordination of care for the chronically ill, paying doctors and hospitals for quality instead of sheer volume of services, reducing prescription drug costs and emphasizing preventive healthcare. But the savings from those changes, of whatever size they turn out to be, may take a decade or more to start showing up in a significant way -- and Medicare’s problems appear to be more pressing.

“There has been a focus among all three campaigns on improving quality and efficiency, but there aren’t a lot of specific proposals to gain control over costs in the healthcare system,” said economist Sara R. Collins of the Commonwealth Fund health policy center, who co-wrote a report on the candidates’ healthcare plans.

Democrats say there is still plenty of time to prevent catastrophic disruptions to either Medicare or Social Security. Even if program trust funds become insolvent, they say, annual payroll tax receipts would still suffice to cover more than three-fourths of the costs of providing benefits.

But just as McCain steers away from the issue of taxes, Clinton and Obama avoid discussing benefit cuts. They also oppose creating private accounts in Social Security, as Bush unsuccessfully tried to do in 2005 -- with McCain’s support. Obama says he would be honest with the public about hard choices on Social Security, and Clinton says the retirement program can be strengthened without hurting seniors or the middle class.

Although Congress is expected to produce a Medicare bill this year to forestall a programmed cut in payments to doctors, few expect progress on the underlying problems.

Health and Human Services Secretary Michael Leavitt reflected a widespread sense of frustration Tuesday as he joined in presenting the Social Security and Medicare reports.

“Americans’ sensitivity to entitlement warnings has become numbed by a repeated cycle of alarms and inaction,” he said. “We noted today in Washington that the cherry blossoms are out. That’s the way spring is in Washington. We see the cherry blossoms and hear Medicare warnings. The cherry blossoms go away, and nothing happens with Medicare.”

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ricardo.alonso-zaldivar@latimes.com