Medicare Crisis Bearing Down on Both Parties, Despite Rhetoric : Democrats continue assault on GOP intentions, but victor will have to tackle issue. Clinton and Dole propose commission.

From the tone of this year’s political campaign, Medicare would seem to be the last thing that the newly elected president and Congress would want to mess with next year.

Republicans, hammered mercilessly by Democrats last year when they proposed trimming Medicare’s projected growth, are trying to say as little as possible about the issue. Democrats, undeterred, are still bashing them, charging that GOP leaders aim to cripple the program.

On Monday, for instance, Vice President Al Gore warned poverty-level seniors in Sarasota, Fla., that Republicans would impose “deep cuts” in Medicare and create a “two-tier system” that would hurt needy retirees.

But no matter who is president and which party controls Congress next year, Medicare’s financial crisis--its trust fund for paying hospital bills is headed for bankruptcy in five years--will almost surely force the program to the top of the agenda.

Inflammatory rhetoric to the contrary, President Clinton and his Republican challenger, Bob Dole, actually share the same general idea of how to save Medicare. As both candidates said during Sunday’s debate, they want to duck the political heat by appointing a bipartisan commission to figure out what to do.

The commission approach worked splendidly when applied to Social Security in 1983. A blue-ribbon commission, one of whose members was then-Sen. Dole, recommended a variety of politically difficult steps: accelerating a tax hike, eliminating an annual cost-of-living increase in benefits and raising the retirement age to 67 for future retirees.

Both parties adopted the agreement in legislative form without dissent, refraining from attacks on each other and keeping a united front to avoid criticism from the elderly.

Medicare’s plight is nearly as desperate now as Social Security’s was 13 years ago, when the pension fund faced running out of money within a year. And on top of Medicare’s short-term crisis, a flood of Americans will begin qualifying for benefits in 15 years, when the oldest members of the baby boom generation reach 65. By the year 2030, a staggering 74 million people will be enrolled in Medicare, compared to 38 million today.

Compounding the problem, scientific advances will surely drive up medical costs in ways that cannot be predicted, just as the first coronary bypass surgery in 1967 rewrote the spending estimates that were made for Medicare when the program was enacted two years earlier. Now, bypass surgery and related procedures consume at least $5 billion a year in Medicare funds, spending that had been totally unforeseen in 1965.

Also, Medicare is defying cost-control efforts that have put the brakes on private spending for health care. That’s partly because Medicare patients still enjoy unlimited access to doctors and hospitals, which private-sector health plans have constricted.

Last year, Democrats savaged the Republicans for proposing to slow Medicare’s rate of growth to 7% a year, down from 11% now. The reality remained that spending would have risen under the GOP plan, but Democrats were happy to leave voters with the impression that their grandparents would be thrown out of hospitals and refused appointments at doctors’ offices. That strategy is alive and well today.

The Democrats’ favorite boogeyman, House Speaker Newt Gingrich (R-Ga.), is “putting Medicare on the chopping block again,” warns a television commercial prepared for Democratic congressional candidates. The AFL-CIO is running ads with similar claims in the districts of freshman Republican House members.

Despite the fevered rhetoric, the differences between the latest versions of the GOP plan and the White House blueprint for Medicare are relatively minor. The GOP would trim $168 billion from the rate of growth over six years, while the Democrats would save $116 billion. Republicans contend the argument is simply over the rate of spending growth, though Democrats assert the larger savings proposed by the GOP would curtail some benefits.

The goal for both parties is to keep the Medicare system solvent for another decade, while a long-range plan can be devised to deal with the baby boom generation.

But first, the candidates who emerge victorious on Nov. 5 will have to turn their attention to a package of fixes that will assure short-term solvency. Even in their specifics, the Democratic and Republican plans have some common elements. These include:

* Reductions in the rates of payment to hospitals, doctors, home care agencies and other health care providers.

* Higher monthly premiums for wealthier individuals and families. Currently, all Medicare beneficiaries, regardless of income, pay $46.10 a month for their insurance under Medicare’s Part B, which helps pay for doctor bills.

A compromise bill in 1997 is likely to depend most heavily on trimming the growth in payments to health care providers. This has political appeal, since it would not directly hit the politically potent Medicare beneficiaries themselves. (The 65-plus age group represents 13% of the population but casts about 20% of all votes.)

But this approach would avoid dealing with the deeper question: Can the country afford to continue letting the elderly select any doctor or hospital while their children and grandchildren are increasingly enrolled in managed-care networks that offer a limited selection of doctors and hospitals?

“We are providing the elderly with a form of health care increasingly rarer for the rest of society,” said Robert Reischauer, former director of the Congressional Budget Office. “It is time to rethink that.”

Still, it remains unlikely that the issue’s complexities will be explored in the last four weeks of the 1996 campaign.

In Sunday’s debate, Dole pleaded for a “truce” in the Medicare battle, calling on Clinton and his campaign to “stop scaring seniors” with claims that the GOP would savage the program. Instead, Gore, addressing about 100 seniors as they dined on a lunch of spinach, carrots and ham-and-potato casserole at the community center in Florida, thrashed last year’s budget passed by the Republican Congress--and vetoed by Clinton--which would have cut $270 billion from Medicare’s projected growth during the next seven years.

“It would have wrecked Medicare,” Gore said. “We are not going to allow that to happen.”

Gore told the seniors that he and Clinton were “committed to preserving and protecting Medicare, and we’ll not allow the Dole-Gingrich plan to be put into effect.”

Gingrich, irked by the pounding his party is taking, said the Democrats and their AFL-CIO allies “have distorted and demagogued Medicare.”

But Democrats are confident that they have struck campaign gold. “Medicare has proven to be a hot-button issue: It brought the president back from the political living dead and breathed life into congressional Democrats,” Reischauer said.

Times staff writer Edwin Chen contributed to this story.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Medicare From A to B

The current system covers everyone 65 and older and the disabled of all ages.

Part A: Pays for hospital bills. The individual pays $736 for the first day in the hospital; the next 59 days are free. Financed by payroll tax of 1.45% each on workers and employers. At current revenue and spending rates, projections are it will run out of money in 2001.

Part B: Covers 80% of approved doctor bills after beneficiary pays the first $100 a year. Beneficiaries pay a premium of $46.10 a month, which covers about 25% of total costs. The other 75% is covered by general tax revenues. As the population ages, spending is expected to soar from $189 billion in 1996 to $446 billion in 2005.

****

A MENU OF POLICY CHOICES

Proposal: Gradually raise eligibility age to 70 in next century.

Outlook: A sure bet. Current beneficiaries wouldn’t be harmed, and future beneficiaries would not feel the effects for many years.

*

Proposal: Raise Part B monthly premium for upper-income households.

Outlook: Also likely. It would probably affect annual income levels of at least $75,000 or $100,000.

*

Proposal: Reduce payments to doctors, hospitals and nursing homes.

Outlook: A virtual cinch, because, rather than directly affecting the large numbers of beneficiaries, it is targeted at the medical community.

*

Proposal: Enroll more elderly in health maintenance organizations and other forms of managed care.

Outlook: Uncertain. Only 10% of current beneficiaries voluntarily join HMOs.

*

Proposal: Boost payroll taxes from today’s 1.45% to 3.21%, enough to keep Part A solvent for 45 years.

Outlook: Likely political poison in today’s anti-tax atmosphere, but a bipartisan deal probably would include more moderate future tax hikes.

*

Proposal: Tax Medicare benefits as income.

Outlook: Not a chance. Lobbyists for senior citizens would go to war to block it.

Sources: Social Security Trustees Report, 1996; Heritage Foundation; “Medicare Now and in the Future,” a book by Marilyn Moon; Bipartisan Commission on Entitlement and Tax Reform.