Ducking and Dodging the Issue of Financing Medicare for Boomers

Winston Churchill once said, “Democracy is the worst kind of government, except for all the others.”

America’s democracy is using great skill and determination these days to avoid grappling with a huge problem: how to keep Medicare’s promise of good health insurance coverage for people over 65 and the disabled.

With spending of nearly $190 billion this year, Medicare is a voracious gobbler of federal tax dollars. It ranks behind only Social Security, defense spending and interest on the national debt, and is growing faster than any of them.

For 37 million people, Medicare is prime health insurance. They can go to any doctor, pay 20% of the costs, with the government picking up the rest of the tab. At the hospital, they pay $736 for the first day, and the next 59 days are free.

It’s more generous and less restrictive than the insurance available to millions of working Americans.

Only one problem: We want this benefit for the elderly and disabled, but we don’t like to pay for it. The American credo is: Give me the benefits but don’t raise my taxes.

Medicare’s hospital trust fund, financed by a total of 2.9% of all salaries, with a 1.45% tax each paid by workers and their employers, will go broke by 2001, the system’s trustees recently reported. And the companion program that pays for doctor bills is also in trouble: The beneficiary premiums of $46.10 a month cover only 30% of the cost of the fund, with the rest coming from a swelling federal deficit.

Democrats and Republicans are screaming about the issue and have spent more than a year locked in partisan combat without agreeing on any steps to shore up the trust funds. The GOP blueprint calls for $168 billion in future savings, while the administration package is $116 billion. Even if they could agree on a rescue package, it would only keep the system going to 2005 or so. That would be just a short-term fix.

For the long range, avoidance is the preferred behavior of all the politicians in Washington, from liberal Democrat to conservative Republican. They are tiptoeing around the menace of financing Medicare for the baby boomers, the hordes of people who become eligible for benefits beginning in 2011.

Today, there are 37 million beneficiaries. Enrollment will soar to 75 million by 2030, when the baby boomers will be claiming their benefits in huge numbers.

The questions are daunting: Do we dare offer the boomers less than their parents and grandparents now get? Can we afford the tab? What happens if someone finds a cure for cancer and a way to slash the number of deaths from strokes and heart attacks? Will the boomers all live until they are in their 90s, only to come down with Alzheimer’s disease?

There are just three painful and distasteful elements in any solution. Raise taxes to get more revenue, cut back on the benefits or boost the age of eligibility from the current 65.

Nothing magic. It’s not like mapping the human genome or sending a man to the moon. Simple ideas, but difficult executions.

And how is our political system responding? By bobbing and weaving, ducking and dodging. How does the Clinton administration propose to deal with the long-range crisis? A special bipartisan advisory group to study the issue. And what do the Republicans in Congress offer for the long-range problem? A study commission.

Suddenly, Bill Clinton and Newt Gingrich have something they can agree on--a way to push serious discussion of Medicare into the hazy future, long after the November election results have been tallied.

If no changes are made in the system, the current 2.9% total payroll tax will soar to at least 12% when the boomers are eligible for benefits. Add to that a likely boost in payroll taxes for the Social Security retirement fund, and the fiscal burden on our children and grandchildren will grow very heavy.

In the fight over Medicare, “the White House blamed Congress and Congress has blamed the White House,” lamented Rep. Philip English (R-Pa.). “While they were blaming each other, Medicare sank lower and lower,” he said, referring to the dwindling hospital trust fund.

He wants to take the popular idea of a commission of Medicare experts a step further. Congress would set a total spending figure for Medicare each year, an absolute limit. The commission of experts would provide the teeth. They would determine how Medicare is changed.

For example, the commission could decide to save money by forbidding bypass surgery to anyone over the age of 90. Or it could say that beneficiaries should pay 30% of the cost of doctor bills instead of the current 20%. Or it could slash the payments for certain kinds of procedures to discourage doctors from doing them.

“Medicare is too important to leave to the politicians,” said English at a news conference where he was surrounded by politicians members of Congress from both parties promoting his idea.

Yet his commission, instead of being made up of elected politicians, would consist of appointed experts. They could be dubbed the czars or kings of health-care policy.

The last king we had was George III of England, and we fired him in 1776.

Thanks to the Constitution, we’ve already got a bipartisan body to deal with Medicare or any other crisis. It’s called the government of the United States, the president and Congress.

Just three words of advice for the people at the White House and Capitol Hill to deal with Medicare: Do your job, and prove that Winston Churchill was indeed right.