Senate Democrats have released their counterproposal to the Republicans' plan to cut Medicare costs by $270 billion over the next seven years, offering in its stead cuts of about $89 billion. Unlike the House and Senate Republican plans, however, the Democrats' proposed savings would come solely from limiting payments to hospitals and nursing homes. The Republicans, besides capping payments to all health providers, including physicians, would also require Medicare beneficiaries to pay more through increased monthly premiums for doctors' services and higher deductibles.
STAGGERING GROWTH: Each party claims that its plan would keep the Medicare trust fund that pays for hospitalization for the elderly from going broke in 2002, as is now projected. After that date, however, both can promise only another six years or so of solvency until bankruptcy again looms. So the need to deal with Medicare's basic structural problems--its staggering rate of growth as health costs relentlessly expand and as the Medicare-eligible population swells--is simply being left for another Congress down the road. This is the politicians' traditional way of handling politically threatening decisions. It's exactly this kind of approach that transforms manageable challenges into inescapable fiscal crises, whether in Los Angeles County or in Washington.
Here are some hard truths about Medicare. In the fiscal year just ended it cost the government $178 billion. Left untouched, it bodes to cost about twice that much seven years from now. Medicare now consumes $11.70 out of every $100 in the federal budget. Within a decade, the Congressional Budget Office projects, that figure will rise to $18.60, Nothing else in the budget is growing so fast. And as millions of baby boomers become eligible for Medicare early in the next century, that rate of growth will soar.
House and Senate Republicans can fairly easily reconcile their differences and pass a Medicare bill that, if it looks anything like what's on the table right now, President Clinton seems certain to veto. With that, the way should be clear for everyone finally to get serious about how to keep Medicare fiscally viable, not just for the next few years but for a long time to come.
REVOLT IN THE GOP: The Republicans are absolutely right when they say Medicare's rate of growth must be slowed significantly and that providers and beneficiaries alike will have to contribute more to reducing the program's costs. The Democrats are dead right when they point to the unseemly linkage between the $270 billion the GOP wants to cut from Medicare spending and the Republicans' proposed $245-billion tax cut--tilted, as most tax cuts are, to the better-off Americans.
A brewing revolt by some Senate Republicans against the size of the proposed tax cut should make it easier for Democrats to deal on Medicare. It's clear that a bipartisan deal is the only way responsible changes can be made to keep Medicare fiscally supportable. A Congress so obviously thinking about the next election would do well now to begin thinking instead about the next generation.