Medicare ‘Cuts’ Come With Ifs, Ands, Buts

Democrats say that Republicans want to cut Medicare. Republicans deny the charge and insist that they want to save the immensely popular program that helps pay medical bills for 35 million people over 65 and 3 million disabled Americans of all ages.

President Clinton and Republican candidate Bob Dole are likely to exchange harsh words on the issue again tonight. How can voters determine which man is telling the truth? Only by peering into the strange universe of Washington budget-making where the word “cut” has a very different meaning than in the ordinary world.

Medicare spending is growing at the rate of 11% a year. Both Clinton and Dole agree that rate is much too fast. They want a slower pace of increase for the program, which is surpassed only by spending for Social Security, defense and interest on the national debt.

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Contrary to Democratic campaign commercials, nobody on the Republican side wants to spend fewer dollars for Medicare, the precise definition of a “cut.” Instead, the argument is over how much to slow the 11% rate of growth for Medicare, which currently pays an average of $5,229 per beneficiary each year.

But slowing the rate of growth will, eventually, almost certainly require some Medicare beneficiaries to get less out of the program than they receive now--a “cut” in benefits, if not in spending.

If nothing is changed and current spending patterns continue, those Medicare outlays will soar to $8,099 per beneficiary in the year 2002. Medicare spending is growing because of increasing intensity of care--more tests and more surgeries are being performed. And more of those who have been sick are getting home care services.

Clinton’s budget plan this year anticipates outlays of $7,342 per person, while the final budget resolution adopted by the Republican Congress calls for expenditures of $6,957.

The $1,000-plus gap between current spending patterns and the figure contained in the budget resolution is the source of partisan wrangling and debate.

Campaigning Saturday in Colorado, Clinton said: “We should reform Medicare, not wreck it.”

Dole complained in an Ohio appearance that “the only thing the Clinton administration has to offer is fear. Fear of destroying Medicare, fear of deficits, fear of budget cuts and the list of distortions, demagoguery and exaggerations sadly goes on and on.”

The administration insists that it can save Medicare’s hospital trust fund, called Part A, which is projected to run out of money in 2001, by slowing the growth in payments to doctors and hospitals without touching the wallets of the 38 million beneficiaries.

But Republicans say that more must be done to reform the basic approach of the program, or its future will be jeopardized. This could mean encouraging more participants to join health maintenance organizations and other forms of managed care designed to control costs.

And it almost certainly will mean that people enrolled in Medicare will have to pay more for their benefits, something no politician wants to admit in an election year.

Medicare beneficiaries today pay an amount equal to just 10% of the value of the benefits they receive. Working Americans pay for Part A of the Medicare fund through a 1.45% payroll tax, which employers match through an identical 1.45% tax. And Part B, which covers doctor bills, is financed overwhelmingly by general tax revenue. The beneficiaries pay $42.50 a month.

Democratic commercials this year are geared to the events of 1995, when the Republican Congress proposed savings of $270 billion over seven years for Medicare as part of the balanced-budget plan vetoed by Clinton.

Most of that money would have come from changes in payments to doctors, hospitals and other health care providers. However, there also were provisions for some increases in payments by beneficiaries, leaving GOP candidates vulnerable to political charges that they were targeting seniors.

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The administration proposed about $100 billion in savings that year, almost all from providers and by shifting some programs. The Democrats refuse to acknowledge any need for additional payments by beneficiaries. But health care experts agree that providers alone cannot rescue Medicare financially. At some level of savings, the quality of care would begin to erode--increasing pressure for higher payments from beneficiaries.

This year the competing Medicare numbers from the White House and Congress have come much closer, with the GOP talking about $168 billion in future savings and the president suggesting $124 billion. The numbers are not that significant in a program that will spend a grant total of more than $1.5 trillion by 2002.