Key Republican Is Cool to Clinton’s Medicare Strategy

President Clinton on Friday invited Republicans to join him in rescuing Medicare, but the chairman of a key congressional panel said GOP lawmakers are still smarting over campaign-trail attacks and are in no mood to cooperate with the White House.

“We need to fix Medicare for a decade, right now,” Clinton said during his first news conference since his reelection. “And we have agreed on savings that will do that.”

But a key Republican, House Ways and Means health subcommittee Chairman Bill Thomas (R-Bakersfield), said prospects for bipartisan collaboration on a rescue plan appear dim.

“William Jefferson Clinton chose to demagogue the [Medicare] issue to be reelected president of the United States,” said Thomas, whose subcommittee writes Medicare legislation in the House.

Thomas said Republicans “look forward to his solution,” but are in no mood to come out first with a legislative proposal to avert the impending bankruptcy of the Medicare hospital trust fund.

In Florida and Arizona, two states with large numbers of older voters, Clinton captured the presidential vote and Democrats won open House seats by telling Medicare enrollees that Republicans were threatening to cripple the program, according to Thomas.

“From a narrow, cold, political, partisan point of view, it was smart,” Thomas said in a speech to the Washington Research Group, a division of the Charles Schwab & Co. brokerage group. But the result, Thomas said, was to alarm the 38 million Medicare beneficiaries, a powerful voting bloc, and make any legislative changes difficult.

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The president and Congress face two challenges in dealing with Medicare, the fourth-largest recipient of government dollars, outranked only by Social Security, defense and interest on the national debt.

In the short run, the hospital trust fund, Part A of Medicare, is expected to run out of money in 2001, based on current spending rates. The program is financed by payroll taxes, 1.45% each paid by workers and their employers on salaries. But nobody favors tax increases.

The administration has said the financial health of the fund can be restored for a decade by reducing outlays by about $100 million. It proposes to obtain almost all of the necessary savings from reductions in the growth of payments to doctors and hospitals.

(The Congressional Budget Office believes that a financial rescue could prove far more costly. It has estimated that about $200 billion in savings would be required just to delay the bankruptcy date to 2004.)

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Even if Congress and the president can agree on a quick fix for the trust fund, they face a more ominous, longer-term challenge: figuring out how to pay for the health bills of the baby boom generation.

The oldest boomers will reach the Medicare eligibility age of 65 in 2011. By 2030, there will be an estimated 76 million people on Medicare, double today’s numbers.

The president was unapologetic about the attacks on Republicans over Medicare. “There are always a lot of hard feelings after every campaign,” he said. “I believe that what I said about the Medicare provisions of the budget I vetoed was accurate and true and fair, and I cannot retract that.”

The Republican budget plan vetoed by Clinton would have reduced future Medicare spending by $270 billion, cutting the growth rate to 7% a year, from the current level of more than 9%.

Thomas insisted that the GOP plan was a good one and said Republicans will not make themselves vulnerable to any new attacks. They want the president to issue a detailed Medicare rescue plan, assuring a decade of solvency for the trust fund while avoiding any new taxes or cost increases, he said.

The president “will have to sell the changes,” by convincing voters of Medicare age to support the plan. “What happened [in the campaign], has happened,” he said. “My lament is that it will be more difficult to do what we must do.”

Thomas expressed doubt about the merits of appointing a commission to address the longer-range challenge of the baby boomers. “Saying you are going to create a commission does not solve the problem,” he said, noting that the panel might simply offer painful choices to future presidents and members of Congress.

Clinton is considering the commission approach to the long-range problems of both Medicare and Social Security. Current projections indicate that the Social Security trust fund will be exhausted by 2029 under the pressure of paying retired baby boomers.

But the president expressed skepticism about two possible solutions to the problem: raising taxes or delaying the retirement age. The payroll tax “is already quite high,” Clinton said, and is a burden on small businesses that create most of the nation’s new jobs. (The payroll tax is 6.20% paid by both workers and employers on the first $62,700 in annual salary).

The retirement age for full benefits, now 65, already is scheduled to rise in stages to 67 by 2027. Pushing it even higher might be unfair, the president said. “It might be fine for somebody like me, you know, who’s always had a desk job, but what about the people who have laboring jobs?” he said.

If higher taxes or a higher retirement age are rejected, the other major solution would be a reduction of benefits, an idea neither the president nor Congress has seemed willing to embrace.