All It Needs Is Fine-Tuning

President Bush and leaders of the Senate Finance Committee are doing the right thing by resisting abandonment of the so-called catastrophic extension of Medicare health insurance for senior Americans. Indeed, new information emerging in congressional debate on the issue has underscored the importance of the benefits approved only last year.

There are problems that require correction, but they are not the problems raised by the massive protest of the Medicare beneficiaries. Critics have challenged the equity of forcing 40% of the seniors, those with higher incomes, to pay the costs of the expanded program and have asserted that the benefits are over-funded and under-needed.

New information before Congress disputes those challenges. There may be ways to make the surcharge more equitable for the middle-income seniors, but the latest calculations show that only 1.8 million of the 32.7 million beneficiaries will have to pay the maximum surcharge, while 59% will pay no surtax and a further 21% will pay $200 or less each year.

The perils of political panic have been demonstrated by the House Ways and Means Committee. Reacting to the massive controversy stirred by the minority of seniors who will pay the surcharge, the committee proposed raising the basic premium for all while cutting the surcharge. That would result in an inequitable shift of the burden from middle- and upper-income seniors to low-income beneficiaries. Fortunately, the Senate leadership has indicated strong opposition to such a scheme.

As matters are turning out, the problem is not with a surplus, as charged earlier, but with a prospective shortage of funds. A new assessment of costs shows that the demand for services, particularly in prescription drugs and skilled nursing home care, is going to exceed the earlier estimates and strain resources.

There remains bitterness among millions of senior citizens, forced for the first time to pay themselves for these benefits. In their outrage, they tend to forget that Medicare remains a remarkable bargain, providing protections and benefits beyond those previously available and far in excess of those available to most Americans.

The Bush Administration is right in defending the program, but the President’s support also embraces an unwelcome element of “fantasy,” to use the word of one Republican congressman. Bush wants the law unchanged at this time so that the initial surplus in funds can be counted in meeting the budget deficit requirements of Gramm-Rudman. Like the surplus in the Social Security trust fund, also counted under Gramm-Rudman, the temporary excess in the Medicare account makes the deficit look smaller but does not in fact diminish the actual burden of the deficit.

Those bookkeeping dodges should not be allowed to divert Congress from proceeding with moves to strengthen, not weaken, Medicare. The expansion of benefits last year was good and appropriate. The funding mechanism, placing the burden on seniors themselves, was appropriate at a time when they are the fastest-growing segment of the population. The panic of some congressmen, in the face of controversy stirred by the minority of seniors who are paying the surtax, makes it harder to find an equitable solution. Nothing more than fine-tuning is required to preserve this useful program.