Medicare Reform Demands Stiffer Spines All Around

In a show of decisive bipartisanship, the Senate voted 70 to 30 last month to increase monthly Medicare premiums for better-off Americans and to gradually lift the eligibility age for benefits to 67.

Alas, that political courage was short-lived. A congressional conference committee now crafting a bipartisan bill is backing away fast from those needed reforms, despite a halfhearted effort by President Clinton to resuscitate them.

The legislators’ lack of nerve is not surprising, for the reforms are opposed by a powerful lobby--the American Assn. of Retired Per- sons--and by strong public convictions. Few in Washington are unfamiliar with the story of how in 1989 then-House Ways and Means Committee Chairman Dan Rostenkowski was chased down the street in his north Chicago district by angry seniors after Congress approved a Medicare premium increase.

In retreating from politically unpopular Medicare reforms, the conference committee has hampered its ability to distribute $115 billion in spending cuts fairly. Instead, urban areas like Los Angeles may shoulder a disproportionate burden of the cuts.

Medicare premiums paid to managed care plans are currently adjusted for the varying regional costs of traditional medical care. That way, plans in relatively high-cost areas like Los Angeles are paid enough to provide quality care. Under the Senate bill, however, these adjustments would be eliminated, cutting payments for managed plans in Los Angeles by up to 30%.

Fortunately, the conference committee is now moving away from the misguided notion of a flat national rate. Its more sensible alternative would basically cap payment increases across the board. The proposal would guarantee only a 2% rate increase to all hospitals, urban and rural, in contrast to the 7.2% average annual increase last year.

A key to reining in Medicare spending is shared sacrifice. The 2% rate increase would and should require some pain for HMOs, which may have to pare down perks, like free eyeglasses, that they use to attract customers from traditional fee-for-service Medicare providers.

But the American public too should share in the sacrifice through premium hikes based on income and the raising of the eligibility age for Medicare by two years. The conference committee still could carry out these reforms without undue pain to the public by, for instance, phasing in the age hike and seeking a way to offer bridge insurance to those who might otherwise temporarily lose coverage if they retired before the rising eligibility age.

Political willpower, however, is clearly lacking. With their leadership in turmoil after the attempted ouster of House Speaker Newt Gingrich, the Republicans have been reluctant to take any bold stand. Meanwhile, President Clinton appeared to be shifting his stance. On Monday, White House spokesman Michael McCurry said the president believed that premium hikes should be considered but more study was needed. On Tuesday, Clinton said he “strongly” supported the premium increase proposed by the Senate.

Consequently, leaderless legislators have retreated from viable Medicare reforms. The final blow came when budget analysts said the new Medicare premiums could be collected most efficiently by the IRS. The mere mention of that dreaded agency was apparently enough to render a risky but needed reform program dead in the Washington water.